Economic theory of politics (19TH CENTURY- )

Economic theory of politics is an analytical model which assumes that politicians are vote maximizers and voters are utility maximizers.

Each voter is assumed to support the political party that will provide him with the highest degree of utility when it is elected.

Politicians, motivated by self-interest and the desire for public office, formulate policies which will attract the maximum number of votes.

Also see: paradox of voting, impossibility theorem

Source:
S de Brunhoff, The State, Capital, and Economic Policy (London, 1978)

Political economy^[1][2] 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 οἰκονομία (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).^[3]

In 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.^[4] 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”.^[5][6] 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.^[7] 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 isn’t considered 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.^[6] 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.^[8] It is available as a stand-alone area of study in certain colleges and universities.

Most institutions of higher education offer the political economy as an area of specialization, either under economics or political science. Notable institutions includes the University of Warwick, London School of Economics, Graduate Institute Geneva, Paul H. Nitze School of Advanced International Studies, and Balsillie School of International Affairs, among others.