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{{short description|Study of production, buying, and selling, and their relations with law, custom, and government}}{{distinguish|Economic policy}}{{Economics sidebar}}{{Politics sidebar|expanded=Primary topics}}File:Rousseau - Discours sur l'oeconomie politique, 1758 - 5884558.tif|thumb|Jean-Jacques RousseauJean-Jacques RousseauPolitical economy is the study of production and trade and their relations with law, custom and government; and with the distribution of national income and wealth. As a discipline, political economy originated in moral philosophy, in the 18th century, to explore the administration of states' wealth, with "political" signifying the Greek word polity and "economy" signifying the Greek word "okonomie" (household management). The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781).Steiner (2003), pp. 61–62In the late 19th century, the term "economics" gradually began to replace the term "political economy" with the rise of mathematical modelling coinciding with the publication of an influential textbook by Alfred Marshall in 1890.Marshall, Alfred. (1890) Principles of Economics. Earlier, William Stanley Jevons, a proponent of mathematical methods applied to the subject, advocated economics for brevity and with the hope of the term becoming "the recognised name of a science".Jevons, W. Stanley. The Theory of Political Economy, 1879, 2nd ed. p. xiv.Groenwegen, Peter. (1987 [2008]). "'political economy' and 'economics'", (The New Palgrave: A Dictionary of Economics), v. 3, pp. 905–06. [Pp. 904–07.] Citation measurement metrics from Google Ngram Viewer indicate that use of the term "economics" began to overshadow "political economy" around roughly 1910, becoming the preferred term for the discipline by 1920.Mark Robbins (2016) "Why we need political economy," Policy Options, weblink Today, the term "economics" usually refers to the narrow study of the economy absent other political and social considerations while the term "political economy" represents a distinct and competing approach.Political economy, where it is not used as a synonym for economics, may refer to very different things. From an academic standpoint, the term may reference Marxian economics, applied public choice approaches emanating from the Chicago school and the Virginia school. In common parlance, "political economy" may simply refer to the advice given by economists to the government or public on general economic policy or on specific economic proposals developed by political scientists. A rapidly growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of economic policies, especially as to distributional conflicts and political institutions.Alesina, Alberto F. (2007:3) "Political Economy," NBER Reporter, pp. 1–5. Abstract-linked-footnotes version. It is available as a stand-alone area of study in certain colleges and universities.

Etymology

Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organized in nation-states. In that way, political economy expanded the emphasis of economics, which comes from the Greek oikos (meaning "home") and nomos (meaning "law" or "order"). Political economy was thus meant to express the laws of production of wealth at the state level, just as economics was the ordering of the home. The phrase économie politique (translated in English as "political economy") first appeared in France in 1615 with the well-known book by Antoine de Montchrétien, Traité de l’economie politique. The French physiocrats were the first exponents of political economy, although the intellectual responses of Adam Smith, John Stuart Mill, David Ricardo, Henry George and Karl Marx to the physiocrats generally receives much greater attention.WEB,weblink What is Political Economy?, Political Economy, Athabasca University, en-CA, 2017-06-15, The world's first professorship in political economy was established in 1754 at the University of Naples Federico II in southern Italy. The Neapolitan philosopher Antonio Genovesi was the first tenured professor. In 1763, Joseph von Sonnenfels was appointed a Political Economy chair at the University of Vienna, Austria. Thomas Malthus, in 1805, became England's first professor of political economy, at the East India Company College, Haileybury, Hertfordshire. In its contemporary meaning, political economy refers to different yet related approaches to studying economic and related behaviours, ranging from the combination of economics with other fields to the use of different, fundamental assumptions that challenge earlier economic assumptions:

Current approaches

File:Keohane small.jpg|thumb|170px|Robert KeohaneRobert KeohanePolitical economy most commonly refers to interdisciplinary studies drawing upon economics, sociology and political science in explaining how political institutions, the political environment, and the economic system—capitalist, socialist, communist, or mixed—influence each other.Weingast, Barry R., and Donald Wittman, ed., 2008. The Oxford Handbook of Political Economy. Oxford UP. Description {{webarchive|url=https://web.archive.org/web/20130125191416weblink |date=2013-01-25 }} and preview. The Journal of Economic Literature classification codes associate political economy with three sub-areas: (1) the role of government and/or class and power relationships in resource allocation for each type of economic system;At (JEL classification codes#Economic systems JEL: P Subcategories|JEL: P) as in JEL Classification Codes Guide, drilled to at each economic-system link.For example:   • Brandt, Loren, and Thomas G. Rawski (2008). "Chinese economic reforms," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.   • Helsley, Robert W. (2008). "urban political economy," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. (2) international political economy, which studies the economic impacts of international relations;At (JEL classification codes#International economics JEL: F Subcategories|JEL: F5) as drilled to in JEL Classification Codes Guide.For example:   • Gilpin, Robert (2001), Global Political Economy: Understanding the International Economic Order, Princeton. Description and ch. 1, " The New Global Economic Order" link.   • Mitra, Devashish (2008). "trade policy, political economy of," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. and (3) economic models of political or exploitative class processes.At (JEL classification codes#Microeconomics JEL: D Subcategories|JEL: D72) and JEL: D74 with context for its usage in JEL Classification Codes Guide, drilled to at JEL: D7. Much of the political economy approach is derived from public choice theory on the one hand and radical political economics on the other hand, both dating from the 1960s.Public choice theory is a microfoundations theory that is closely intertwined with political economy. Both approaches model voters, politicians and bureaucrats as behaving in mainly self-interested ways, in contrast to a view, ascribed to earlier mainstream economists, of government officials trying to maximize individual utilities from some kind of social welfare function.• Tullock, Gordon ((The New Palgrave: A Dictionary of Economics|[1987)] 2008). "public choice," The New Palgrave Dictionary of Economics. Abstract.   • Arrow, Kenneth J. (1963). Social Choice and Individual Values, 2nd ed., ch. VIII, sect. 2, The Social Decision Process, pp. 106–08. As such, economists and political scientists often associate political economy with approaches using rational-choice assumptions,Lohmann, Susanne (2008). "rational choice and political science," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. especially in game theory• Shubik, Martin (1981). "Game Theory Models and Methods in Political Economy," in K. Arrow and M. Intriligator, ed., Handbook of Mathematical Economics, Elsevier, v. 1, pp. 285{{dead link|date=March 2019|bot=medic}}{{cbignore|bot=medic}}-330.   • _____ (1984). A Game-Theoretic Approach to Political Economy. MIT Press. Description {{webarchive|url=https://web.archive.org/web/20110629151809weblink |date=2011-06-29 }} and review extract.   • _____ (1999). Political Economy, Oligopoly and Experimental Games: The Selected Essays of Martin Shubik, v. 1, Edward Elgar. Description {{Webarchive|url=https://web.archive.org/web/20120524055749weblink |date=2012-05-24 }} and contents of Part I, Political Economy.   • Peter C. Ordeshook (1990). "The Emerging Discipline of Political Economy," ch. 1 in Perspectives on Positive Political Economy, Cambridge, pp. 9–30.   • _____ (1986). Game Theory and Political Theory, Cambridge.Description and preview. and in examining phenomena beyond economics' standard remit, such as government failure and complex decision making in which context the term "positive political economy" is common.Alt, James E.; Shepsle, Kenneth (eds.) (1990), Perspectives on Positive Political Economy (Cambridge [UK]; New York: Cambridge University Press). Description and content links and preview. Other "traditional" topics include analysis of such public policy issues as economic regulation,Rose, N. L. (2001). "Regulation, Political Economy of," International Encyclopedia of the Social & Behavioral Sciences, pp. 12967–12970. weblink" title="archive.today/20130202153809weblink">Abstract. monopoly, rent-seeking, market protection,Krueger, Anne O. (1974). "The Political Economy of the Rent-Seeking Society," American Economic Review, 64(3), p. 291–303. institutional corruption• Bose, Niloy. "corruption and economic growth," The New Palgrave Dictionary of Economics Online, 2nd Edition, 2010. Abstract.   • Rose-Ackerman, Susan (2008). "bribery," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. and distributional politics.• Becker, Gary S. (1983). "A Theory of Competition among Pressure Groups for Political Influence," Quarterly Journal of Economics, 98(3), pp. 371–400.   • Weingast, Barry R., Kenneth A. Shepsle, and Christopher Johnsen (1981). "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, 89(4), pp. 642–664.   • Breyer, Friedrich (1994). "The Political Economy of Intergenerational Redistribution," European Journal of Political Economy, 10(1), pp. 61–84. weblink" title="archive.today/20130201203532weblink">Abstract.   • Williamson, Oliver E. (1995). "The Politics and Economics of Redistribution and Inefficiency," Greek Economic Review, December, 17, pp. 115–136, reprinted in Williamson (1996), The Mechanisms of Governance, Oxford University Press, ch. 8, pp. 195–218.   • Krusell, Per, and José-Víctor Ríos-Rull (1999). "On the Size of U.S. Government: Political Economy in the Neoclassical Growth Model," American Economic Review, 89(5), pp. 1156-1181.   • Galasso, Vincenzo, and Paola Profeta (2002). "The Political Economy of Social Security: A Survey," European Journal of Political Economy, 18(1), pp. 1–29.{{dead link|date=March 2018 |bot=InternetArchiveBot |fix-attempted=yes }} Empirical analysis includes the influence of elections on the choice of economic policy, determinants and forecasting models of electoral outcomes, the political business cycles,• Drazen, Allan (2008). "Political business cycles," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.   • Nordhaus, William D. (1989). "Alternative Approaches to the Political Business Cycle," Brookings Papers on Economic Activity, (2), pp. 1-68. central-bank independence and the politics of excessive deficits.• Buchanan, James M. (2008). "public debt," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.   • Alesina, Alberto, and Roberto Perotti (1995). "The Political Economy of Budget Deficits," IMF Staff Papers, 42(1), pp. 1-31.A more recent focus has been on modeling economic policy and political institutions as to interactions between agents and economic and political institutions,• Timothy, Besley (2007). Principled Agents?: The Political Economy of Good Government, Oxford. Description.   • _____ and Torsten Persson (2008). "political institutions, economic approaches to," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.   • North, Douglass C. (1986). "The New Institutional Economics," Journal of Institutional and Theoretical Economics, 142(1), pp. 230-237.   • _____ (1990). Institutions, Institutional Change and Economic Performance, in the Political Economy of Institutions and Decisions series. Cambridge. Description and preview.   • Ostrom, Elinor (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press. Description and preview links. {{ISBN|9780521405997}}.   • _____ (2010). "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," American Economic Review, 100(3), pp. 641-72 {{webarchive|url=https://web.archive.org/web/20131105113916weblink |date=2013-11-05 }}. including the seeming discrepancy of economic policy and economist's recommendations through the lens of transaction costs.Dixit, Avinash (1996). The Making of Economic Policy: A Transaction Cost Politics Perspective. MIT Press. Description and chapter-preview links. Review-excerpt link. From the mid-1990s, the field has expanded, in part aided by new cross-national data sets that allow tests of hypotheses on comparative economic systems and institutions.Beck, Thorsten et al. (2001). "New Tools in Comparative Political Economy: The Database of Political Institutions," World Bank Economic Review,15(1), pp. 165-176. Topics have included the breakup of nations,Bolton, Patrick, and Gérard Roland (1997). "The Breakup of Nations: A Political Economy Analysis," Quarterly Journal of Economics, 112(4), pp. 1057–1090. the origins and rate of change of political institutions in relation to economic growth,Alesina, Alberto, and Roberto Perotti (1994). "The Political Economy of Growth: A Critical Survey of the Recent Literature," World Bank Economic Review, 8(3), pp. 351–371. development,Keefer, Philip (2004). "What Does Political Economy Tell Us about Economic Development and Vice Versa?" Annual Review of Political Science, 7, pp. 247–72. PDF. financial markets and regulation,Perotti, Enrico (2014). "The Political Economy of Finance", in"Capitalism and Society" Vol. 9, No. 1, Article 1 weblink the importance of institutions,"Chang, H. J. (2002). Breaking the Mould – An Institutionalist Political Economy Alternative to the Neo-Liberal Theory of the Market and State", in "Cambridge Journal of Economics", 26(5), backwardness],Acemoglu, Daron, and James A. Robinson (2006). "Economic Backwardness in Political Perspective," American Political Science Review, 100(1), pp. 115–131. reform• Mukand, Sharun W. (2008). "policy reform, political economy of," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.   • Sturzenegger, Federico, and Mariano Tommasi (1998). The Polítical Economy of Reform, MIT Press. Description {{webarchive|url=https://web.archive.org/web/20121011071925weblink |date=2012-10-11 }} and chapter-preview links. and transition economies,• Roland, Gérard (2002), "The Political Economy of Transition," Journal of Economic Perspectives, 16(1), pp. 29–50.   • _____ (2000). Transition and Economics: Politics, Markets, and Firms, MIT Press. Description and preview.   • Manor, James (1999). The Political Economy of Democratic Decentralization, The World Bank. {{ISBN|9780821344705}}. Description. the role of culture, ethnicity and gender in explaining economic outcomes, macroeconomic policy,Drazen, Allan (2000). Political Economy in Macroeconomics, Princeton. Description & ch. 1-preview link. {{Webarchive|url=https://web.archive.org/web/20101207135934weblink |date=2010-12-07 }}, and review extract. the environment,• Dietz, Simon, Jonathan Michie, and Christine Oughton (2011). Political Economy of the Environment An Interdisciplinary Approach, Routledge. Description and preview. {{Webarchive|url=https://web.archive.org/web/20130723083755weblink |date=2013-07-23 }}   • Banzhaf, H. Spencer, ed. (2012). The Political Economy of Environmental Justice Stanford U.P. Description and contents links. {{Webarchive|url=https://web.archive.org/web/20130119130312weblink |date=2013-01-19 }}   • Gleeson, Brendan, and Nicholas Low (1998). Justice, Society and Nature An Exploration of Political Ecology, Routledge. Description {{Webarchive|url=https://web.archive.org/web/20130510060252weblink |date=2013-05-10 }} and preview.   • John S. Dryzek, 2000. Rational Ecology: Environment and Political Economy, Blackburn Press. B&N description.   • Barry, John 2001. "Justice, Nature and Political Economy," Economy and Society, 30(3), pp. 381–394.    • Boyce, James K. (2002). The Political Economy of the Environment, Edward Elgar. Description. {{Webarchive|url=https://web.archive.org/web/20130522214634weblink |date=2013-05-22 }} fairness•Zajac, Edward E. (1996). Political Economy of Fairness, MIT Press Description and chapter-preview links.   • Thurow, Lester C. (1980). The Zero-sum Society: Distribution and the Possibilities For Economic Change, Penguin. Description and preview. and the relation of constitutions to economic policy, theoretical• Persson, Torsten, and Guido Tabellini (2000). Political Economics: Explaining Economic Policy, MIT Press. Review extract, weblink" title="web.archive.org/web/20060911000631weblink">description and chapter-preview links.   • Laffont, Jean-Jacques (2000). Incentives and Political Economy, Oxford. Description.   • Acemoglu, Daron (2003). "Why Not a Political Coase Theorem? Social Conflict, Commitment, and Politics," Journal of Comparative Economics, 31(4), pp. 620–652. and empirical.Persson, Torsten, and Guido Tabellini (2003). The Economic Effects Of Constitutions, Munich Lectures in Economics. MIT Press. Description and preview, and review extract.Other important landmarks in the development of political economy include:
  • New political economy which may treat economic ideologies as the phenomenon to explain, per the traditions of Marxian political economy. Thus, Charles S. Maier suggests that a political economy approach "interrogates economic doctrines to disclose their sociological and political premises.... in sum, [it] regards economic ideas and behavior not as frameworks for analysis, but as beliefs and actions that must themselves be explained".Mayer, Charles S. (1987). In Search of Stability: Explorations in Historical Political Economy, Cambridge University Press, Cambridge, pp.3–6. Description and scrollable preview. Cambridge. This approach informs Andrew Gamble's The Free Economy and the Strong State (Palgrave Macmillan, 1988), and Colin Hay's The Political Economy of New Labour (Manchester University Press, 1999). It also informs much work published in New Political Economy, an international journal founded by Sheffield University scholars in 1996.cf: Baker, David (2006). "The political economy of fascism: Myth or reality, or myth and reality?" {{webarchive|url=https://web.archive.org/web/20110623033918weblink |date=2011-06-23 }}, New Political Economy, 11(2), pp. 227–250.
  • International political economy (IPE) an interdisciplinary field comprising approaches to the actions of various actors. In the United States, these approaches are associated with the journal International Organization, which in the 1970s became the leading journal of IPE under the editorship of Robert Keohane, Peter J. Katzenstein and Stephen Krasner. They are also associated with the journal The Review of International Political Economy. There also is a more critical school of IPE, inspired by thinkers such as Antonio Gramsci and Karl Polanyi; two major figures are Matthew Watson and Robert W. Cox.Cohen, Benjamin J. "The transatlantic divide: Why are American and British IPE so different?", Review of International Political Economy, Vol. 14, No. 2, May 2007.
  • The use of a political economy approach by anthropologists, sociologists, and geographers used in reference to the regimes of politics or economic values that emerge primarily at the level of states or regional governance, but also within smaller social groups and social networks. Because these regimes influence and are influenced by the organization of both social and economic capital, the analysis of dimensions lacking a standard economic value (e.g. the political economy of language, of gender, or of religion) often draws on concepts used in Marxian critiques of capital. Such approaches expand on neo-Marxian scholarship related to development and underdevelopment postulated by André Gunder Frank and Immanuel Wallerstein.
  • Historians have employed political economy to explore the ways in the past that persons and groups with common economic interests have used politics to effect changes beneficial to their interests.McCoy, Drew R. "The Elusive Republic: Political Economy in Jeffersonian America", Chapel Hill, University of North Carolina.
  • Political economy and law is a recent attempt within legal scholarship to engage explicitly with political economy literature. In the 1920s and 1930s, legal realists (e.g. Robert Hale) and intellectuals (e.g. John Commons) engaged themes related to political economy. In the second half of the 20th century, lawyers associated with the Chicago School incorporated certain intellectual traditions from economics. However, since the crisis in 2007 legal scholars especially related to international law, have turned to more explicitly engage with the debates, methodology and various themes within political economy texts.JOURNAL,weblink Law and the Political Economy of the World, Kennedy, David, 2013, Leiden Journal of International Law, December 24, 2015, BOOK, Research Handbook on Political Economy and Law, Haskell, John D., Edward Elgar, 2015, 978-1-78100-534-7,
  • Thomas Piketty's approach and call to action which advocated for the re-introduction of political consideration and political science knowledge more generally into the discipline of economics as a way of improving the robustness of the discipline and remedying its shortcomings, which had become clear following the 2008 financial crisis.Capital in the Twenty-First Century, Harvard University Press, 2014, {{ISBN|978-0674430006}}
  • In 2010, the only Department of Political Economy in the United Kingdom formally established at King's College London. The rationale for this academic unit was that "the disciplines of Politics and Economics are inextricably linked", and that it was "not possible to properly understand political processes without exploring the economic context in which politics operates"weblink
  • In 2017, the Political Economy UK Group (abbreviated PolEconUK) was established as a research consortium in the field of political economy. It hosts an annual conference and counts among its member institutions Oxford, Cambridge, King's College London and the London School of Economicsweblink

Related disciplines

Because political economy is not a unified discipline, there are studies using the term that overlap in subject matter, but have radically different perspectives:NEWS,weblink political economy, Encyclopedia Britannica, 2017-06-15, en,
  • Politics studies power relations and their relationship to achieving desired ends.
  • Philosophy rigorously assesses and studies a set of beliefs and their applicability to reality.
  • Economics studies the distribution of resources so that the material wants of a society are satisfied; enhance societal well-being.
  • Sociology studies the effects of persons' involvement in society as members of groups and how that changes their ability to function. Many sociologists start from a perspective of production-determining relation from Karl Marx. Marx's theories on the subject of political economy are contained in his book Das Kapital.
  • Anthropology studies political economy by investigating regimes of political and economic value that condition tacit aspects of sociocultural practices (e.g. the pejorative use of pseudo-Spanish expressions in the U.S. entertainment media) by means of broader historical, political and sociological processes. Analyses of structural features of transnational processes focus on the interactions between the world capitalist system and local cultures.
  • Archaeology attempts to reconstruct past political economies by examining the material evidence for administrative strategies to control and mobilize resources.Hirth, Kenneth G. 1996. Political Economy and Archaeology: Perspectives on Exchange and Production. Journal of Archaeological Research, 4(3):203–239. This evidence may include architecture, animal remains, evidence for craft workshops, evidence for feasting and ritual, evidence for the import or export of prestige goods, or evidence for food storage.
  • Psychology is the fulcrum on which political economy exerts its force in studying decision making (not only in prices), but as the field of study whose assumptions model political economy.
  • History documents change, often using it to argue political economy; some historical works take political economy as the narrative's frame.
  • Ecology deals with political economy because human activity has the greatest effect upon the environment, its central concern being the environment's suitability for human activity. The ecological effects of economic activity spur research upon changing market economy incentives. Additionally and more recently, ecological theory has been used to examine economic systems as similar systems of interacting species (e.g., firms).JOURNAL, May, Robert M., Levin, Simon A., Sugihara, George, Ecology for bankers, Nature, 451, February 21, 2008, 7181, 893–895, 10.1038/451893a, 18288170,
  • Cultural studies examines social class, production, labor, race, gender and sex.
  • Communications examines the institutional aspects of media and telecommunication systems. As the area of study focusing on aspects of human communication, it pays particular attention to the relationships between owners, labor, consumers, advertisers, structures of production and the state and the power relationships embedded in these relationships.

See also

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Notes

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References

  • Baran, Paul A. (1957). The Political Economy of Growth. Monthly Review Press, New York. Review extrract.
  • Commons, John R. (1934 [1986]). Institutional Economics: Its Place in Political Economy, Macmillan. Description and preview.
  • Leroux, Robert (2011), Political Economy and Liberalism in France : The Contributions of Frédéric Bastiat, London, Routledge.
  • Maggi, Giovanni, and Andrés Rodríguez-Clare (2007). "A Political-Economy Theory of Trade Agreements," American Economic Review, 97(4), pp. 1374-1406.
  • O'Hara, Phillip Anthony, ed. (1999). Encyclopedia of Political Economy, 2 v. Routledge. 2003 review weblink" title="web.archive.org/web/20110513195120weblink">links.
  • Pressman, Steven, Interactions in Political Economy: Malvern After Ten Years Routledge, 1996
  • Rausser, Gordon, Swinnen, Johan, and Zusman, Pinhas (2011). Political Power and Economic Policy. Cambridge: Cambridge U.P.
  • Winch, Donald (1996). Riches and Poverty : An Intellectual History of Political Economy in Britain, 1750–1834 Cambridge: Cambridge U.P.
  • Winch, Donald (1973). "The Emergence of Economics as a Science, 1750–1870." In: The Fontana Economic History of Europe, Vol. 3. London: Collins/Fontana.
  • Quadagno, Jill. “Aging and The Life Course: An Introduction to Social Gerontology / Edition 6.” Barnes & Noble, www.barnesandnoble.com/w/aging-and-the-life-course-jill-quadagno/1100262260.
  • F., David. “Utopia and the Critique of Political Economy.” Journal of Australian Political Economy, Australian Political Economy Movement, 1 Jan. 2017, www.questia.com/library/journal/1G1-501598977/utopia-and-the-critique-of-political-economy.

Journals

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External links

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