Routledge Encyclopedia of International Political Economy
R. J. BARRY JONES (Ed.)
London & New York : Routledge (Taylor & Francis Group), 2001, 3 vols, 1818 pp.
What is Political Economy and what are the differences of this classical field of study from what we today call economics and politics? One possible way of defining political economy is to use the traditional sense developed by mainstream political economists of the classical era and define it as a body of fruitful ideas for the guidance of economic policy-making by political authorities or their opponents. However, one could hardly agree that political economists like Marx (or Proudhon for that matter) simply aimed at developing policy recommendations for ‘political authorities or their opponents’ when in fact their fundamental aim was to radically criticise the existing socio-economic system and show the need for its replacement with a completely different form of socio-economic organisation. It is therefore obvious that political economy is a much broader area of research than simply studying the interrelationship between the ‘political ‘and the ‘economic’ in order to draw policy recommendations. Particularly so, when it could be argued that this criterion may not adequately cover even some mainstream classical political economists like Adam Smith, who were not simply concerned with policy-making, as their clear aim was to justify ideologically the new system that had just emerged out of feudalism and mercantilism.
At the same time, there is no doubt that economics is a much more narrow field of study than political economy. In fact, it was in the last quarter of the 19th century that important methodological changes, introduced independently by mainstream economists Jevons, Menger and Walras, started the marginalist revolution, which represented a movement in mainstream economic analysis away from classical political economy. This was in the context of an effort to develop a ‘science’ of the economy, what we today call economics, which was defined by Alfred Marshall as a science or toolbox concerned “with the attainment and with the use of the material requisites of well being”, a field of study clearly distinguished from ‘politics’, i.e. the study of political relations and structures .
Although most mainstream practitioners moved in the twentieth century away from political economy into economics, still, the tradition of political economy, which has been more accurately defined as ‘a science of economic organisation’ (p. 1252), not only did not disappear but in fact showed a clear revival in the post second world war period. Mainstream political economy continued existing in parallel with economics throughout the liberal and statist phases of the modern era., in the form of classical liberal political economy and socialdemocratic political economy respectively. The common characteristic of both mainstream political economy, as well as of economics as such, was the attempt to ‘objectify’ and ‘scientify’ the analysis of the economy –a characteristic that was shared in fact by every self-respecting field of academic study in the modern era.
However, as I showed elsewhere, it was not only mainstream economists that attempted to develop a ‘science’ of the economy. On the radical side, both Marx and Proudhon had no doubts about the ‘scientific’ character of their own theories. This is not of course surprising if one takes into account that, at the time they developed their own liberatory projects, ‘scientism’, i.e. the excessive belief in everything ‘scientific’, was at its highest point. In such a climate, respectability about the seriousness of their views on an alternative society could only be gained by draping them in ‘scientific’ colours, with Marx attempting to provide a universal interpretation of all human history and render the socialist transformation of society historically necessary and Proudhon having no doubt at all about the ‘scientific’ and ‘objective’ character of his theories. Of course, both (albeit for different reasons) did not consider the political economy of mainstream economists to be a true science. Furthermore, Marx did not consider Proudhon’s economic analysis to be scientific and vice versa. Marx, in particular, having dismissed Proudhon’s science, went on to devote the entire fourth volume of Capital to disprove mainstream political economy and even as recently as a couple of decades ago structuralist Marxists declared that Marxism is not only a science but a superior science, in fact, ‘the’ science of all sciences, given its ability to synthesise the various special sciences: “Marxism therefore becomes the general theory of Theoretical Practice and the key to and judge of what counts as genuine knowledge.”
The explanation for this common characteristic of mainstream and alternative political economy is that both trends, following the modernist tradition, attempted to rely on objective theories and methods, (i.e., on procedures that are supposedly valid, irrespective of our expectations, wishes, attitudes and ideas) in order to justify the status quo and the need for an alternative society respectively . The argument in favour of this approach usually has taken the form that such theories and methods reflect in fact `objective processes' at work in society or the natural world. However, as I tried to show elsewhere, a ‘science’ (mainstream or alternative) of the economy or society in general is impossible . Few believe today, after the decisive introduction in twentieth-century science of Heisenberg’s indeterminacy principle, as well as of chaos theory (pp. 149-153), that it is still possible to derive any 'objective' 'laws' or 'tendencies' of social change. Thus, if cause and effect can be uncertain even in physics, the most exact of sciences, and the reference to objective laws is disputed even with respect to the natural world, it is obvious that postulating similar laws or tendencies for society is, at least, absurd. Furthermore, the “scientification” of economic analysis is nothing more than an attempt to “objectify” an ideology, either this ideology aims at justifying the status quo of the market economy (as mainstream economists do) or alternatively its replacement by a different form of socio-economic organisation (as opponents of the market economy system do). This is particularly undesirable in case the supporters of such a “scientific” ideology take over power. As the case of statist socialism has shown, there is a definite link between the 'scientification' of the liberatory project in the hands of Marxists-Leninists and the subsequent bureaucratisation of socialist politics and the totalitarian transformation of social organisation.
However, in the present neoliberal phase of the modern era, it seems that mainstream political economy, which is mainly an evolution of the ideas that originated in the work of Hayek and von Mises, has split between the old “scientific” strand and a postmodern current mainly focused around ‘Post-rationalist political-economy’. The former (as well as economics proper), still cultivates the myth of a ‘scientific’ study of the economy whereas the latter challenges the ‘scientific’ nature of political economy and the social sciences in general. But if modernist objectivism seems problematic and undesirable, this does not mean that post-modernist subjectivism is less problematic and more desirable. Postmodernist political economy (see entries on postmodernism and post-rationalist political economy, pp. 1246-1257), though a significant step forward compared to modernist political economy/economics (e.g. rejection of ‘scientism’/objectivism in the explanation of social phenomena, rejection of uni-discciplinary analysis), may easily lead to general relativism and irrationalism, if not to complete abandonment of radical politics. It is characteristic for instance how supporters of post-rationalist International Political Economy (IPE) see their difference with modernist political economy (p.1253):
While rationalist IPE is grounded in a unitary theory of the state, post-rationalist IPE shifts the terrain by offering a theory of states or a theory of the plurality of states. This changes the order of question from how order and change come about in a ‘social formation’ or ‘world system’ to how order and change are constructed in a system of fragmented political authority.
Clearly, post-rationalist IPE, under a pseudo-pluralistic banner, rules out any universalist conception of the present economic system, which of course is still based on the system of the market economy— despite the parallel existence of ‘fragmented political authority’.
Still, the dilemma of having to choose between a modernist 'objectivist' approach and a post-modernist subjectivist approach, in interpreting socio-economic phenomena, and ―even more so― in justifying the project for an alternative society, is a false one. Today, it is possible to define a liberatory project for an Inclusive Democracy without recourse to controversial objective grounds, or to post-modernist neo–conservatism. Thus, when we define the liberatory project in terms of the demand for social and individual autonomy, as I did elsewhere, we do so because we responsibly choose autonomy, as well as its expression in democracy, and we explicitly rule out the possibility of establishing any `objective' laws, processes or tendencies which, inevitably, or 'rationally', lead to the fulfilment of the autonomy project. The Inclusive Democracy entry in this Encyclopedia (pp 732-740) provides a concise and conceptually comprehensive introduction to the conception of a new liberatory project, which has not been derived on the basis of some natural or social ‘laws’ of evolution but as a project which is based on a synthesis of two major historical traditions (classical democratic and socialist) that also encompasses radical green, feminist and liberation movements in the South.
It is therefore possible to develop a rigorous analysis of the economy and society in general, like the one proposed by the Inclusive Democracy project, which, though not claiming that it is grounded on some ‘laws’ of natural or social evolution, is still based on a rational analysis (i.e. the use of reason and sense-data) to derive a definable body of principles to assess social and political changes. However, such a body of principles could only be based on an axiomatic choice: whether we take for granted the present system of the market economy and its political complement, representative ‘democracy’, or whether instead we assume that this system is by definition (as it cannot secure the equal distribution of economic and political power) rejectable. It is on the basis of this fundamental choice that practitioners in the field were explicitly (or more often implicitly) making, one can classify them as belonging to either one of the two major traditions, i.e.: mainstream political economy or radical political economy. In other words, the fundamental point of difference between them is not alternative policy recommendations but alternative world views on the economic system itself. Mainstream economists/political economists ―which include classical political economists like Adam Smith, John Stuart Mill and David Ricardo but also modern ones like John Maynard Keynes and the post-war generation of economists-- take the existing system of capitalism or market economy for granted. On the other hand, radical political economists --which similarly include classical political economists like Karl Marx but also Pierre J. Proudhon and others in the libertarian tradition, as well as the new radical economists of the post-war period (world-system theorists, libertarian socialists, libertarians of the democratic tradition —to which the Inclusive Democracy project belongs― radical ecologists and others) challenge the system itself and its ability to meet the needs of all people rather than over-covering the needs of a few and under-covering the needs of the majority of the world population, as the market economy system does. An intermediate position is held by Karl Polanyi, who, although not taking the system of the market economy for granted, ends up with the socialdemocratic conclusion that society —through the state— can effectively control the market economy —a justifiable hypothesis at the time (1940s).
Although the Routledge Encyclopedia does not clearly distinguish between these two main traditions of political economy, still, it is a comprehensive survey of political economy, with particular reference to the international domain —especially useful in the present globalised economy― covering almost all major theoretical issues and analytical approaches within the field. The set also provides detailed discussions of the contributions of key political economists and surveys a wide range of empirical conditions and developments within the global political economy including its major institutions. Thus, theoretical entries range from alienation and casino capitalism to fiscal crisis, geo-politics, neo-realism, tariffs, Fordism, inflation, liberation theology, monetarism, NATO and zero-sum games. The list of entries makes obvious the interdisciplinary nature of the project. The very fact that over 350 contributors spread in more than 30 countries and including academics from the major universities of the world, took part in this project, is a clear indication of the serious effort that was made to offer an up to date survey of all major developments in political economy. Finally, the way that the material is organised, including over 1200 entries in 3 volumes presented alphabetically with cross-references, a comprehensive index and suggestions for further reading, makes it a particularly useful tool. Not only for the connoisseur but even for the average reader who wishes to be authoritatively informed on the major economic developments and schools of economic thought.
 A. Marshall, Principles of Economics, (London: Macmillan, 1961/1890), p. 119
 See T. Fotopoulos. ‘The myth of postmodernity’, Democracy & Nature, vol 7, no 1 (March 2001), pp. 27-76
 See T. Fotopoulos, ‘Beyond Marx and Proudhon’, Democracy & Nature, vol 6 no 1 (March 2000), pp. 95-110
 P.J. Proudhon, System of Economical Contradictions: or, the Philosophy of Misery, translated from the French (1846) by Benj. R. Tucker, published and sold by Benj. R. Tucker, Boston, Mass. 1888 (Cambridge: John Wilson and Son), vol. I, p 43.
 Karl Marx, Theories of Surplus Value (vol IV of Capital, Part II) (London: Lawrence & Wishart, 1969)
 G. McLennan, Marxism and the Methodologies of History, (London: Verso, 1981) p. 27.
 Takis Fotopoulos, Towards An Inclusive Democracy, The Crisis of the Growth Economy and the Need For A New Liberatory Project, (London: Cassell, 1997) ch 8
 Takis Fotopoulos, Towards An Inclusive Democracy, ch 5