On the Meaning of“Political Economy”

Abstract

Economics has been titled“Political Economy”for a long time since the Classical School. The word economy is etymologically related to oikos (house), so in order to tell social economy, an adjective“political”(that is“social”in Greek origin) must be attached to economy. At the same time, “Political Economy”had another meaning, implicating“the science of a statesman”as Adam Smith called it, although no clear distinctions between policy and theory were observed.
Alfred Marshall used“Economics”in place of Political Economy. He dealt with laws of causality in economic facts, but did not admit to give valuations for them. Even in his work on economic welfare, the thesis was to inquire into the causes of welfare (or wealth) in society, putting welfare as an objective of valuations aside.
Nowadays, we find that“Political Economy”is adopted as a political science or a policy science, by some heterodox economists, especially those of Neoinstitutionalism. Among others, Gunnar Myrdal deserves to be paid attention in the methodological point of view. In his opinion, any economic thinking could not be neutral in regard to political situation, left or right. Then he asserts that it is required for a policy science to set value premises as hypotheses, not value judgements themselves, and to examine the relevance of them to the reality. The recent“Political Economy”, it seems to me, may be a way to tear off the mask of neutrality in economic thinking and to find, if any, common ground of knowledge for conflicting opinions.