BPSC-105 UNIT - 5

 POLITICAL ECONOMY APPROACH

 IMPORTANT QUESTIONS;
TOPICS :
> Describe the various attributes of political economy as a concept.
 5.1 Introduction > explain how the concept has become relevant for the study of
comparative politics and,
 5.2 Development as Modernisation > trace the evolution of the political economy approach and,
 5.3 Development as Underdevelopment and Dependency > identify the different theoretical strands within the political
economy approach formed the basis of studying relationships
 5.4 World-System Analysis
between countries and social and political phenomena over the past
 5.5 Articulation of Modes of Production Approach years.
 5.6 Class Analysis and Political Regimes
 5.7 State Centred Approach
 5.8 Globalisation and Neo-Liberal Approach
 INTRO & OBJECTIVES
 OBJECTIVES ; The political economy approach to the study of comparative politics affirms that there exists a relationship
between politics and economics and that this relationship works and makes itself manifest in several ways.
- This approach provides the clue to the study of relationships between and explanations of social and political phenomena.

- After going through this unit, you should be able to: political economy is a way of looking at how politics (government and
decision-making) and economics (money, jobs, and businesses) are connected and influence each other. It's like
studying how these two things work together to shape our society.
 But here's the twist: there isn't just one way to understand political economy. It can mean different things depending on the
ideas and beliefs of the people looking at it. For example, some folks might see it from a liberal perspective (more focused on
individual freedoms), while others might view it from a Marxist perspective (more focused on fairness and equality).
 Now, here's something interesting: a long time ago, people didn't really separate economics and politics like we
do today.They thought of managing a household as a part of politics. So, in a way, politics and economics were
closely connected.
 People like Karl Marx had a different take. He didn't use the term "political economy" but talked about it as a "critique of
political economy." He was concerned with how things were made and traded in society.
➢ Political economy refers to a specific way of understanding social and political phenomena whereby, economics and politics are
not seen as separate domains.
- It is premised (a) on a relationship between the two and (b) the assumption that this relationship unfolds in multifarious
ways.
➢ These assumptions constitute important explanatory and analytical frameworks within which social and political phenomena
can be studied.
- Having said this, it is important to point out that whereas the concept of political economy points at a relationship, there is
no single meaning which can be attributed to the concept.
- The specific meaning the concept assumes depends on the theoretical, ideological tradition. e.g., liberal or Marxist, within
which it is placed, and depending on this positioning, the specific manner in which economics and politics themselves are
understood.
 And in more recent times, espInterestingly, the appearance of economics and politics as separate domains is itself a modern
phenomenon. From the time of Aristotle till the middle ages, the concept of economics as a self-regulating separate sphere was
unknown. The word 'economy' signified in Greek 'the art of household management’.

> Among the classical political economist, Adam Smith considered political economy as ‗a branch of the science of statesman
or legislator‘ecially after many countries gained independence from colonial rule, folks used different approaches, like political
sociology and political economy, to figure out how societies change and how resources are distributed.
 One theory that came up was the modernization theory, which tried to explain how countries develop and
change, especially after big events like the end of empires and the start of the Cold War.
 So, political economy is like looking at the connection between politics and money, but it can mean different
things to different people, depending on their beliefs. It also has a long history and has been used to
understand how societies change over time.
MODERNISATION THEORY: DEVELOPMENT AS MODERNISATION
DEVELOPMENT
 Modernization theory is a way of thinking about how societies change and develop, especially in the context of newly
ASindependent
MODERNISATION
countries in the Third World (countries in Africa, Asia, and Latin America). It divides societies into two
categories: traditional and modern.
 Traditional Societies: These are seen as societies where people have close ties to specific individuals (like family
members), jobs and positions are often inherited, feelings play a big role in how people interact (rather than being
objective), and roles overlap (for example, the royal household also runs the government). They tend to have low
economic development, depend on agriculture, and have limited networks for trade and communication.
 Modern Societies: These are the opposite of traditional societies. They are based on achievement, universal rules
that apply to everyone, and individualism. In modern societies, people have opportunities to move up in society, there is
the rule of law, and individual freedoms are important.

> Modernisation theory was based on an evolutionary model of development, whereby all nation-states passed through
broadly similar stages of development. In the context of the post-War world, it was considered imperative that the modern
West should help to promote the transition to modernity in the traditional Third World.

> According to this theory, there are five stages of development that all societies go through: traditional, preconditions for
take-off, take-off, drive toward maturity, and high mass consumption.
- Third World countries were seen as being in the traditional stage and needed to move to the second stage by developing things
like trade, rational thinking, and an elite that invested in the country's development. Western investment and ideas were thought
to speed up this process.
 Traditional: Starting point, not very modern.
 Preconditions for Take-Off: Need more trade, logic, and rich investors.
 Take-Off: Rapid growth and better jobs.
 Drive Toward Maturity: Stability, fair laws, and opportunities.
 High Mass Consumption: Very modern, lots of stuff.
Additionally, scholars who followed this theory believed that industrialization (developing industries) would bring Western ideas
like individualism and equality of opportunity, which would reduce social problems and conflicts in these countries.

However, it's important to note that this theory was developed during the Cold War, and its true motives were sometimes
unclear. Was it just an analysis of development, or was it a way for Western countries to counter communism in the Third World?
The subtitle of one of the key books in this theory, "A Non-Communist Manifesto," suggests that political motives might have
played a significant role.
What are the core features of the modernisation theory?
Modernization theory is a sociological and economic theory that emerged in the mid-20th century as a way to explain
the process of development and societal change in the context of the global post-World War II era. While it has been
criticized and has evolved over time, it still provides insights into the dynamics of development in many parts of the
world. The core features of modernization theory include:

1. Economic Growth: Central to modernization theory is the idea that economic development and growth are
fundamental for societal progress. It suggests that as societies industrialize and transition from agrarian to industrial
economies, they will experience increased prosperity, higher living standards, and reduced poverty.
2. Social Change: Modernization theory posits that economic development triggers broader social changes, such as
urbanization, increased education, and the spread of new technologies. These changes are seen as contributing to
improved living conditions and social well-being.
3. Westernization: Modernization theory often assumes a Western model of development as the ideal. It suggests
that societies should adopt Western values, institutions, and practices to modernize successfully. This includes
embracing democracy, capitalism, and individualism as key components of modernization.
4. Stages of Development: The theory often conceptualizes development as a series of stages through which
societies progress. These stages typically include traditional, pre-modern, modern, and post-modern phases.
Progression from one stage to the next is seen as a natural evolution.
5. Cultural Change: Modernization theory emphasizes the importance of cultural change as societies modernize.
Traditional cultural values and norms are believed to give way to more modern and secular values, which can have a
profound impact on social and political institutions.
6. Structural Transformation: It suggests that as economies modernize, there is a shift from agrarian and primary
industries to manufacturing and services. This structural transformation is expected to lead to increased productivity
and wealth.
7. Education: Education is seen as a key driver of modernization, as it is believed to empower individuals with the
knowledge and skills necessary for economic and social advancement.
8. Urbanization: The theory predicts that as economies modernize, there will be a shift from rural to urban living, as
people move to cities in search of better economic opportunities. Urbanization is seen as a sign of progress.
9. Democratization: Modernization theory often argues that economic development is linked to the emergence of
democratic political systems. As societies become more prosperous and educated, they are thought to be more likely
to embrace democratic values and institutions.
10. Dependency Theory Critique: While not an inherent part of modernization theory, it's important to note that it
has been widely critiqued, especially by dependency theory. Dependency theory argues that the global economic
system perpetuates inequality between developed and developing countries, and it challenges the idea that
development should follow a Western model.

> It's important to recognize that modernization theory has been criticized for its ethnocentrism, Western bias, and
oversimplification of complex development processes. Many scholars and policymakers today consider it overly deterministic and
prefer more nuanced approaches to understanding development. Nonetheless, it played a significant role in shaping
development discourse in the mid-20th century and contributed to the development of alternative theories.
DEVELOPMENT AS UNDERDEVELOPMENT
AND DEPENDENCY
 Dependency theory emerged in the late 1950s as a critique of modernization theory, which we discussed earlier.
 Origins of Dependency Theory: Dependency theory was developed by scholars like Andre Gunder Frank and Paul
Baran. Baran argued that the economic relationships between Western countries and the rest of the world
were exploitative, with Western nations taking wealth from other regions.
 Critique of Dualism: Dependency theory criticized the modernization theory's idea of dividing societies into "modern"
and "traditional." Instead, it argued that all countries have been part of the global capitalist system since the 16th century,
with various levels of involvement.
 Chain of Dominance and Dependence: Dependency theorists proposed that a chain-like relationship exists within the
global capitalist system, with developed countries (metropoles) exploiting surplus wealth from less developed countries (satellites).
 Development and Underdevelopment: According to dependency theory, development and underdevelopment are two
sides of the same coin. The developed countries were not underdeveloped before but rather undeveloped. Underdevelopment
is a result of historical relations, including imperialism and colonialism, between less developed satellite nations and more
developed metropoles.
 Historical Examples: Dependency theory pointed out that economic development in Latin America occurred when the
linkages with metropoles weakened, such as during the Napoleonic wars or the Great Depression. It declined as these linkages were
restored.
 However, dependency theory had its own limitations:
 Historical Focus : It sometimes pays too much attention to what happened in the past and not enough on what's happening now.
 Economistic Approach: It mostly looks at money stuff and doesn't talk much about social classes, politics, or governments.
 Obscure Concept of Development: It's not always clear what "development" means in this theory. Does it mean doing things on
your own, or copying what rich countries do?
 Explaining Economic Success : It can't really explain why some poor countries suddenly become rich (like "economic miracles").
 In summary, dependency theory challenged the modernization perspective by highlighting the exploitative relationships between
developed and less developed countries. It argued that development and underdevelopment are interconnected within the global
capitalist system. However, it had its own shortcomings, including a narrow focus on economic factors and difficulty explaining
economic success in some countries.
WORLD SYSTEM ANALYSIS
 World-system analysis, as developed by Immanuel Wallerstein, is a way of understanding how the global capitalist
economy works.
 End of Pre-Capitalist Modes: Wallerstein argued that when Europe began expanding in the 16th century, it marked the end
of older ways of economic organization in many parts of the world. These older systems, like feudalism, disappeared as they
became part of the global capitalist market.
 Unitary but Disparate: In this theory, the modern world economy is like a single system, but it's divided into different
levels: core, semi-periphery, and periphery. Each level plays a specific role in the global system. Instead of just looking at
rich countries and poor countries, it looks at how they interact with each other.
 Multilateral Relations: Unlike dependency theory, which focused on one-way relationships between powerful countries and
weaker ones, world-system theory looks at how all countries interact with each other. This includes relationships
between powerful countries, weaker countries, and other weaker countries.
Core vs. Periphery:
Core Countries: These are the powerful and wealthy countries. In these countries, business people (bourgeoisie) are strong, and
landowners are not as influential.
Periphery Countries: These are the weaker and less wealthy countries. They often have less powerful business elites and more
influential landowners.
Government's Role: Whether a country becomes part of the core or stays in the periphery depends on how strong its
government is. Strong governments help a country get more of the world's wealth.
 Stability of the System:
 The global capitalist system stays stable because:
 Military Power: The strongest countries have the most military power, which can keep the system in check.
 Belief in the System: People generally believe in the capitalist system and its benefits.
 Social Classes: Most people are in lower or middle social classes, so there isn't a unified opposition to the system.
 Semi-Periphery:
 The semi-periphery is like the middle ground between the core and the periphery.
 It can change and either become more central (part of the core) or fall behind (part of the periphery).

Key Factors for Expansion: Wallerstein said the world economy changed because of three main things: (i) it got bigger by
including more places, (ii) it found new ways to control labor and resources, and (iii) strong governments in core
countries made sure wealth flowed to them.
Criticism: Some people criticize this theory because it focuses a lot on the global system and not enough on what happens
in individual countries. They say it doesn't explain how production works, only how the market works.
HOW WALLERSTIEN CRITICIZED MODERNISATION THEORY?
It's important to recognize that modernization theory has been criticized for its ethnocentrism, Western bias, and oversimplification of complex
development processes. Many scholars and policymakers today consider it overly deterministic and prefer more nuanced approaches to
understanding development. Nonetheless, it played a significant role in shaping development discourse in the mid-20th century and contributed to
the development of alternative theories
Immanuel Wallerstein, a prominent sociologist and historical sociologist, was a major critic of modernization theory. He
offered a critique from a world-systems perspective, which challenged many of the assumptions and ideas put forth by
modernization theory. Wallerstein's criticisms can be summarized as follows:

Eurocentrism: Wallerstein argued that modernization theory was inherently Eurocentric in its approach. It assumed
that Western societies were the pinnacle of development, and it encouraged non-Western societies to emulate
Western models of development. This Eurocentrism, according to Wallerstein, ignored the historical context of
Western dominance and the exploitation of non-Western countries in the process of modernization.

Dependency Theory: Wallerstein was a key figure in the development of dependency theory, which challenged the
idea that all societies could follow the Western path to development. Dependency theory argued that the global
economic system was characterized by unequal power relations, with core (developed) countries benefiting at the
expense of periphery (developing) countries. This perspective emphasized the structural factors that perpetuated
underdevelopment in many parts of the world.
World-Systems Theory: Wallerstein's world-systems theory offered an alternative framework for understanding the
global system. He suggested that the world was characterized by a capitalist world-economy in which countries
were interconnected and played different roles. Core countries benefited from exploiting peripheral countries,
leading to a cycle of underdevelopment in the periphery. This view challenged the idea that development was a
linear process that all countries could achieve through modernization.

Historical Context: Wallerstein stressed the importance of historical context in understanding development. He argued
that the historical processes of colonization and imperialism had a profound impact on the development trajectories
of countries. Modernization theory often overlooked or downplayed this historical context, leading to a narrow and
simplistic view of development.
Dependency and Underdevelopment: Wallerstein's critique highlighted the relationship between dependency and
underdevelopment. He argued that the modernization theory's focus on development as a linear progression
ignored the fact that some countries remained in a state of underdevelopment due to their role in the global
economic system.
Structural Factors: Wallerstein emphasized structural factors in the global system, such as unequal trade relations and
the exploitation of labor and resources in peripheral countries. He argued that these structural factors were
significant barriers to development and that modernization theory failed to address them adequately.

In summary, Immanuel Wallerstein criticized modernization theory for its Eurocentrism, its failure to consider the
historical context of global inequality, and its oversimplification of development processes. He advocated for a more
critical and structural understanding of the global system, which led to the development of dependency theory and
world-systems theory as alternative frameworks for analyzing development and underdevelopment in a global context.
ARTICULATION OF MODES OF PRODUCTION
APPROACH
 The "Articulation of Modes of Production Approach" is a theoretical framework that emerged in the late 1960s to understand
how societies in the Third World transition and develop. It's based on certain ideas from Marxism.
 Multiple Modes of Production: This approach argues that Third World societies have several ways or modes of producing
goods and services. For example, they might have modern factories and also traditional farming methods. These different modes
of production coexist.
 Capitalism Dominates and Articulates: It suggests that capitalism is a dominant force in these societies and interacts with
these pre-existing modes of production. In simpler terms, capitalism influences and works alongside other ways of
producing things.
 Social Formation vs. Mode of Production: It makes a distinction between "social formation" and "mode of production."
Social formation includes economic, political, and ideological practices or levels within a society. Mode of
production refers to the dominant economic level within that society.The economic level sets limits on other
levels.
 Relations of Production: The economic level is defined by its "relations of production," which means the direct relationship
between those who produce surplus (extra) goods and those who take that surplus. For example, in a slave-master relationship
or a serf-lord relationship, different modes of production are defined.
Core and Periphery: This perspective helps explain the division of the world into core and periphery regions.The
core regions are typically capitalist and rely on free wage labor, while periphery regions incorporate non-capitalist modes
of production. Unequal trade relations are seen as a reflection of unequal relations of production, which allows advanced capitalist
countries to dominate areas where non-capitalist modes exist.
 Interrelated Modes of Production: Unlike some other theories, this approach emphasizes the interconnectedness of these
modes of production. It argues that when capitalism expanded into the Third World, it encountered pre-
capitalist modes of production that it didn't necessarily eliminate but sometimes preserved and sometimes
destroyed.
 Critique: However, this approach has been criticized for its functionalist methodology, meaning it explains social change
as a result of the necessary logic of capitalism. Critics argue that it doesn't give enough importance to human actions
and struggles and assumes that everything revolves around serving capitalism.

What is meant by mode of production? What is the nature of socio-economic, reality in the
Third world according to the articulation of mode of production theory?
The concept of "mode of production" is a fundamental idea in Marxist theory, and it refers to the specific way in which
a society organizes and carries out economic production. It encompasses the social relations, technological and
productive forces, and the underlying economic structure of a given society at a particular historical period. In essence,
it defines how goods and services are produced, distributed, and the roles individuals and classes play in this process.

There are typically two main components within a mode of production:

1. Forces of Production: These are the material and technological factors involved in production, including tools,
machinery, raw materials, and labor. The level of technological development and the efficiency of these productive
forces are critical components of the mode of production.
2. Relations of Production: These refer to the social relationships and structures that determine how production is
organized and how the products of labor are distributed. It includes the relationships between different classes or
social groups in society and the rules governing property ownership and resource allocation.

Now, regarding the nature of socio-economic reality in the Third World according to the articulation of mode of
production theory, this perspective suggests several key points:

1. Dependence and Underdevelopment: Mode of production theory has been applied to argue that many Third
World or developing countries are characterized by a dependent mode of production. This means that their
economies are structured in a way that serves the interests of more advanced capitalist economies in the Global
North. This dependency can manifest in various ways, such as the export of raw materials, reliance on foreign
investment, and unequal terms of trade, all of which can contribute to underdevelopment.
2. Capitalist vs. Pre-Capitalist Modes: In many Third World countries, there can be a coexistence of capitalist and
pre-capitalist modes of production. This coexistence creates complex economic and social dynamics, with different
classes and modes of production in tension or competition with each other. In some rural areas, traditional
agricultural practices may persist alongside modern capitalist enterprises.
3. Class Relations: Mode of production theory underscores the significance of class relations in understanding socio-
economic reality. Many Third World countries exhibit stark class divisions, often characterized by a wealthy elite or
ruling class that controls land, resources, and political power, while a majority of the population may be engaged in
subsistence agriculture or wage labor in less favorable conditions.
4. Imperialism and Neocolonialism: Mode of production theory can be used to analyze how imperialism and
neocolonialism have influenced the economic structures of many Third World countries. Historical colonialism, and
ongoing neocolonial relationships, can shape the economic and political structures, leading to unequal power
dynamics and resource extraction.

5. Dependency and Development Strategies: Scholars have used mode of production theory to examine the
development strategies pursued by Third World countries. Some argue that strategies focused on import substitution
industrialization or export-oriented growth are influenced by the underlying mode of production and the need to
address dependency on foreign economies

It's important to note that there are diverse interpretations and critiques of mode of production theory, and not all
scholars within the Marxist tradition agree on its application to the Third World. Critics argue that it can oversimplify
complex socio-economic realities and may not fully capture the diversity of experiences within the Global South.
Nonetheless, it remains a valuable framework for analyzing the economic and social dynamics in many Third World
countries, particularly in the context of global capitalism and imperialism.
CLASS ANALYSIS AND POLITICAL REGIMES
 In the early 1970s, some Marxist scholars came up with a new way to understand how things were changing in
Third World countries (those less developed countries). Two important thinkers in this approach were
Colin Leys and James Petras.
 Instead of focusing on economic growth or stagnation, they asked a different question: Who benefits from
development? Petras looked at how different classes (groups of people with similar economic interests) were
driving these changes. He believed that both external (outside the country) and internal (inside the
country) class structures played a big role.
 According to Petras, as capitalism expanded worldwide, it created groups in Third World countries
that collaborated with external powers and also exploited their own people. When these countries
gained independence from colonial rule, these groups had access to the government and could choose different
ways to develop, based on their class alliances.
Petras studied the conditions under which wealth accumulated, like the role of the government, how different classes interacted,
and the impact of wealth accumulation on social classes. He looked at how classes formed or changed, how money was
distributed (whether it concentrated among a few or spread more widely), and how people related in terms of
jobs and social controls.
 Petras said that after gaining independence, Third World countries had three main options for developing:
 Neo-colonial Strategy: This is when the government works closely with the powerful businesses from other countries to
exploit its own people. Most of the wealth and power end up in the hands of foreign companies.
 National Development Strategy: Here, the government focuses on using its own people's labor and limits the role of
foreign companies. The wealth is often shared more evenly among the country's elites.
 National Populist Strategy: In this case, the government teams up with its own people, nationalizes foreign or local
businesses, and tries to spread the wealth more evenly among its citizens.

STATE CENTRED APPROACH

> In the late 1960s and early 1970s, some smart people were talking about how governments and power work in different
countries.
They were looking at this from a point of view called Marxism, which has to do with how society is organized.These Marxists
thought about how the government, or the "state," is connected to the different groups of people in a society. They had different
ideas about how this connection worked.
Some people in the United States thought that there was a really powerful group of rich folks who controlled the
government. They called this group the "corporate bourgeoisie." They believed that the government was
basically a tool that the rich used to get what they wanted. This idea was kind of like what Marx and Engels said in their
"Communist Manifesto" about the state being controlled by the rich.
But there was a twist.These thinkers also said that sometimes the government could go against the interests of
individual rich people.
Other folks, like French thinker Nicos Poulantzas, had a different idea.They said that the government's actions
were more about the overall structure of society, not just who was in charge. Poulantzas thought that the government
had some freedom to make decisions to keep things stable, even if it meant going against what some groups wanted.
Poulantzas also believed that the government was a battleground where different groups fought for power. It wasn't just a tool of
the rich; it was influenced by regular people and their movements.

This debate about how the government worked kept going, and there was even a big argument between two
thinkers, Ralph Miliband and Poulantzas, in a magazine.
The discussion also spread to countries in the developing world. Scholars like Hamza Alavi looked at how governments in places
like Pakistan and Bangladesh were shaped by the colonial powers that set them up. These governments often served the interests
of different groups while keeping the capitalist system going.
Similar ideas were applied to India by Pranab Bardhan, and the concept of "relative autonomy" of the
government was explored in Africa by John Saul. Another thinker, Issa G. Shivji, said that the people who worked
for the government could become their own powerful group, like a "bureaucratic bourgeoisie.“

This debate about the government's role and how it works continues in different academic journals. It's all about trying to
understand how power and politics play out in different parts of the world.
GLOBALISATION AND NEO-LIBERALISM
APPROACH
 Neoliberal Approach: This is a way of thinking about how poorer countries can develop. Neoliberalism says that these
countries are poor because they tried to develop with too much government control. Instead, they should let the
market run things and have less government involvement.
 Separation of State and Market: Neoliberalism believes that the government and businesses should be separate. The
government's job is just to make sure things are fair and safe for businesses to operate.
 Critique of Separation: Some people don't agree with this separation idea. They say it's not something natural; it was made
up by capitalism in England. It might not work the same way everywhere else.
 International Institutions: Big organizations like the World Bank and IMF support these neoliberal ideas and tell poor
countries to follow them.
 Neoliberal Policies: Neoliberal policies include things like making money worth less, having less government control, and
letting businesses trade freely.
 Ignoring Realities: These policies might not take into account the real problems in each country or how the
government helps people who are struggling.

Skepticism About "Good Governance": Neoliberalism talks about "good governance" as important, but some people doubt
that it can happen without poor people being involved in decisions.

Developmental Needs: Critics say that putting freedom ahead of democracy might not be the best way to help a
country develop because it doesn't address all the issues people face.
What are the key elements of the neo-liberal approach?
The neoliberal approach is an economic and political philosophy that emerged in the mid-20th century and has had a
significant influence on economic policy and governance in many countries around the world. While neoliberalism
encompasses a wide range of ideas and policies, some key elements of the neoliberal approach include:

1. Free Market Capitalism: Neoliberalism places a strong emphasis on free-market capitalism. It argues that markets
should be allowed to operate with minimal government intervention. The belief is that competitive markets will
allocate resources efficiently, promote innovation, and lead to economic growth.
2. Deregulation: Neoliberalism advocates for reducing government regulations on businesses and industries. The idea
is to remove barriers that may inhibit market competition, which is seen as a driver of efficiency and economic
growth.
3. Privatization: Neoliberalism often supports the privatization of state-owned enterprises and public services. This
means transferring the ownership and management of government-run entities, such as utilities, transportation, and
healthcare, to the private sector. Proponents argue that privatization can lead to greater efficiency and innovation.
4. Fiscal Conservatism: Neoliberalism promotes fiscal conservatism, which involves a focus on reducing government
spending, balancing budgets, and lowering taxes. The aim is to limit the size and influence of government in the
economy.
5. Monetary Policy: Neoliberalism favors the use of monetary policy, primarily through central banks, to control
inflation and maintain price stability. It places a strong emphasis on independent central banks with a focus on low
inflation targets..
6. Trade Liberalization: Neoliberalism supports the removal of trade barriers, such as tariffs and quotas, to facilitate international
trade. This promotes the idea that countries should specialize in producing goods and services in which they have a comparative
advantage.
7. Individualism and Competition: Neoliberalism emphasizes individualism and competition as drivers of economic success. It
believes that individuals should be free to pursue their self-interest, and competition among individuals and businesses will lead to
desirable outcomes.
8. Austerity: During economic downturns, neoliberalism often advocates for austerity measures, including cutting government
spending and reducing social welfare programs, to restore fiscal discipline and confidence in the economy.
9. Globalization: Neoliberalism is closely associated with globalization, which refers to the increasing interconnectedness of
economies and societies around the world. It sees globalization as an opportunity for growth through increased trade, investment,
and the spread of market-oriented policies.
10. Minimal Safety Nets: Neoliberalism tends to favor minimal social safety nets, arguing that extensive welfare programs can create
disincentives to work and stifle economic growth. Instead, it promotes targeted, means-tested assistance programs.
11. Financial Deregulation: Neoliberalism supports the deregulation of financial markets, including the removal of restrictions on the
movement of capital and the development of complex financial instruments.
12. Minimal Government Intervention: Neoliberalism generally opposes government intervention in labor markets, including
minimum wage laws and collective bargaining, as it believes these interventions can distort market dynamics.
> It's important to note that while neoliberalism has been credited with contributing to economic growth in some contexts, it has also
been criticized for exacerbating income inequality, reducing social safety nets, and potentially leading to financial crises. The
implementation of neoliberal policies varies by country and has been a subject of debate and contention in many political and
economic discussions.
a. Describe the various Attributes of Political Economy as a Concept:

1. Interdisciplinary Nature: Political economy is an interdisciplinary field that combines insights from economics, political science,
sociology, and other social sciences. It seeks to understand the relationship between political and economic factors.
2. Focus on Power and Distribution: Political economy examines the distribution of resources, wealth, and power within societies. It
explores how political institutions and processes influence economic outcomes and vice versa.
3. Role of Institutions: Political economy places a strong emphasis on institutions, both formal (government structures, legal
systems) and informal (norms, customs). Institutions shape economic behavior and outcomes.
4. Economic Systems: Political economy analyzes different economic systems, including capitalism, socialism, and mixed economies.
It explores how these systems function and their consequences for society.
5. Policy Analysis: Political economy is concerned with the formulation and impact of economic policies. It evaluates the role of
government in regulating markets, redistributing wealth, and promoting economic growth.
6. Global Perspective: Political economy considers the global context, examining how international trade, finance, and geopolitics
influence domestic economic and political dynamics.
7. Historical Perspective: It often adopts a historical perspective to understand how economic and political systems have evolved
over time and how historical legacies shape contemporary societies.
8. Conflict and Cooperation: Political economy studies the conflicts and cooperation that arise from competing interests in society,
such as between labor and capital, or between different interest groups.
9. Ideology and Values: Political economy explores how ideology and values influence economic and political choices. It
investigates how cultural factors shape economic behavior.
10. Inequality: A central concern of political economy is the study of economic inequality and how it is influenced by political
decisions, policies, and institutions.
b. explain how the concept has become relevant for the study of comparative politics :

Comparative politics is the subfield of political science that involves comparing and analyzing political systems, institutions, and
processes across different countries. Political economy has become highly relevant in the study of comparative politics for several
reasons:

1. Understanding Variations in Economic Systems: Comparative politics scholars use political economy to compare and contrast
economic systems across countries. They examine how differences in economic systems, such as capitalism and socialism, affect
political institutions and political behavior.
2. Explaining Policy Differences: Political economy helps explain variations in economic policies and outcomes. Comparative
politics researchers use this framework to understand why some countries have more interventionist economic policies while
others favor free-market approaches.
3. Analyzing Political Institutions: Political economy sheds light on how political institutions, such as electoral systems and party
structures, interact with economic factors. For example, it can help explain the role of interest groups in shaping economic policy.
4. Assessing the Impact of Globalization: Comparative politics scholars use political economy to assess how globalization
influences domestic political systems. They study how international trade, finance, and multinational corporations affect national
sovereignty and policy choices.
5. Inequality and Social Movements: Political economy is crucial for understanding the causes and consequences of income
inequality, which often leads to social and political movements. Comparative politics researchers analyze how inequality influences
political behavior and mobilization.
6. Development and Underdevelopment: Political economy is central to the study of development and underdevelopment across
countries. Scholars examine how economic structures, colonial legacies, and global economic systems affect a country's
development path.
7. Policy Transfer and Learning: Comparative politics scholars use political economy to analyze how countries learn from each
other's policy experiences. They explore how policy ideas and practices spread across borders.

In essence, the study of political economy within comparative politics provides valuable insights into the complex interplay between
political and economic factors in different countries, helping researchers understand the unique challenges and opportunities faced by
diverse political systems.
a. Trace the evolution of the political economy approach
Evolution of the Political Economy Approach: The political economy approach has evolved significantly over time, adapting to
changes in the global political and economic landscape. Here is a brief overview of its evolution:

1. Classical Political Economy: The roots of political economy can be traced back to classical thinkers like Adam Smith and David
Ricardo in the 18th and 19th centuries. They examined the relationship between politics and economics, emphasizing the
importance of free markets, division of labor, and the role of government in facilitating economic growth.
2. Marxist Political Economy: Karl Marx's work in the 19th century laid the foundation for Marxist political economy. Marx analyzed
the capitalist system, highlighting class struggle, exploitation, and the role of the state in serving the interests of the capitalist
class. This perspective emphasized the need for working-class revolution and the establishment of socialism.
3. Historical and Structural Political Economy: In the 20th century, scholars like Karl Polanyi contributed to the development of
historical and structural political economy. Polanyi's work, "The Great Transformation," examined the impact of market capitalism
on society and argued for the need to embed the market within social and political institutions.
4. Dependency Theory: Emerging in the mid-20th century, dependency theory focused on the economic relationships between
developed and developing countries. Scholars like Raúl Prebisch and Andre Gunder Frank argued that underdevelopment in the
Global South was a result of unequal trade relations and economic exploitation by the Global North.
5. Neoliberalism: Starting in the 1970s, neoliberalism gained prominence as an economic and political ideology. It emphasized free-
market principles, deregulation, privatization, and reduced government intervention. Neoliberalism shaped economic policy in many
countries and had a significant impact on political economy studies.
6. Institutional Political Economy: Institutional political economy, rooted in the works of scholars like Douglass North, focused on
the role of institutions in shaping economic behavior and outcomes. It emphasized the importance of formal and informal rules,
property rights, and governance structures.
7. Global Political Economy: With increasing globalization in the late 20th century, scholars began to examine the global dimensions
of political economy. This approach analyzed international trade, finance, and global institutions like the World Trade Organization
and the International Monetary Fund.

b. Identify the different theoretical strands within the political economy approach formed the basis of studying
relationships between countries and social and political phenomena over the past years.

Different Theoretical Strands within Political Economy: Political economy encompasses various theoretical strands that
have formed the basis for studying relationships between countries and social and political phenomena. These include:
1. Classical Political Economy: This strand, represented by thinkers like Adam Smith and David Ricardo, emphasizes the role
of market forces and the division of labor in economic development. It forms the foundation for understanding market-driven
capitalism.
identify the different theoretical strands within the political economy approach formed the basis of studying relationships
between countries and social and political phenomena over the past years.

2. Marxist Political Economy: Grounded in the works of Karl Marx, this perspective focuses on class struggle, exploitation,
and the capitalist mode of production. It provides critical insights into the dynamics of capitalism and class relations.
3. Institutional Political Economy: Institutionalists like Douglass North and Elinor Ostrom stress the importance of
institutions in economic behavior. This perspective explores how institutions shape incentives and constraints for
individuals and organizations.
4. Dependency Theory: This theory, associated with scholars like Raúl Prebisch and Andre Gunder Frank, examines the
unequal economic relationships between developed and developing countries. It highlights the role of imperialism and
global economic structures in perpetuating underdevelopment.
5. Neoliberalism: Neoliberalism, rooted in the works of Friedrich Hayek and Milton Friedman, advocates for free
markets, limited government intervention, and privatization. It has been influential in shaping economic policies in
many countries.
6. Global Political Economy: This strand explores the impact of globalization on political and economic systems. It
investigates international trade, finance, and the role of global institutions in shaping economic outcomes.
7. Historical and Structural Political Economy: Scholars in this tradition, like Karl Polanyi, examine the historical and
structural forces that influence economic behavior. They emphasize the social embeddedness of markets.
8. Comparative Political Economy: This approach focuses on cross-country comparisons to understand variations in
economic and political systems. It examines how different countries' political institutions and historical legacies
influence economic outcomes.
These theoretical strands within political economy have evolved and intersected over time, contributing to a rich and
diverse field of study that seeks to understand the complex interactions between politics and economics in different
contexts.