Political economy – sometimes referred to as comparative economy – is an interdisciplinary field in political science and economics that studies the relationship between political and economic systems, including how they influence each other. The field originated within the 16th-century Western moral philosophy, with theoretical works exploring the administration of states' wealth. The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although the work of the French physiocrats preceded them. Various thinkers, from John Stuart Mill to Karl Marx, saw economics and politics as inseparable. By the mid-18th century, political economy emerged as a distinct field, encompassing the study of phenomena that is now categorised under economics. In the late-19th century, economics had become an independent discipline separate from political economy with the rise of mathematical modeling, coinciding with the publication of the influential textbook Principles of Economics by Alfred Marshall in 1890. In its modern form, political economy is an interdisciplinary field analyzing phenomena such as labour markets, international trade, growth, the distribution of wealth, and economic inequality. In contrast, the term economics usually refers to the narrow study of the economy absent other political and social considerations.
Etymology and history
Origins Before economics became a separate modern discipline, the term originally referred to household or estate management and originated from the Greek word oikonomikos, whose definition is "practiced in the management of a household or family". Political economy originally extended that idea to the level of the state, which involved the management of wealth, production, trade, taxation, and subsistence at the national level. The phrase économie politique (translated into English as "political economy") first appeared in France in 1615 with the book Traicté de l'oeconomie politique by French soldier-economist Antoine de Montchrétien. In Adam Smith's The Wealth of Nations, Smith described political economy as part of the "science of a statesman or legislator" whose goals were to provide revenue or subsistence for the people and revenue for the state. Other contemporary scholars attribute the roots of this study to the 14th century Tunisian historian and sociologist, Ibn Khaldun, for his work on making the distinction between "profit" and "sustenance." He also calls for the creation of a science to explain society and goes on to outline these ideas in his major work, the Muqaddimah. In Al-Muqaddimah, Khaldun states, "Civilization and its well-being, as well as business prosperity, depend on productivity and people's efforts in all directions in their own interest and profit" – seen as a modern precursor to Classical economic thought. The French physiocrats (including François Quesnay, Richard Cantillon and Anne-Robert-Jacques Turgot) were the first major 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 receive much greater attention in contemporary discourse.
Redefinition and relationship with economics By the late 18th century, themes that are now associated with economics—including "core principles and laws pertaining to money, markets, and trade"—had been solidified into a discourse that had come to be known as political economy. However, in the late 19th century, economics increasingly tried to become a more autonomous, technical, and often mathematical discipline. In his work A General Mathematical Theory of Political Economy, William Stanley Jevons developed the marginal utility theory of value—sparking the "marginal revolution" and introducing mathematical methods in economics—and advocated economics for brevity and with the hope of the term becoming "the recognised name of a science". In the book From Political Economy to Economics, authors Milonakis and Fine argue that "the process by which political economy became economics" involved "desocialisation and dehistoricisation" and that this involved "the separation of economics from the other social sciences at the beginning of the twentieth century." They also critique the "marginal revolution" as pioneered by William Stanley Jevons, adding that the move from political economy to economics gave the discipline a rationale for developing independently of other social disciplines. At about the same time, political science was also becoming its own autonomous academic discipline separate from history and political economy. Additionally, Alfred Marshall's Principles of Economics (published 1890) argued that the field was "better described" as economics than by the "narrower term" political economy. On the "marginalist revolution", Michael Bernstein explains that the intellectual roots of modern economics can be traced back to "the moral philosophy of the eighteenth and nineteenth centuries"—the tradition that included classical political economy—and argues that the marginalist-neoclassical turn allowed economists to break with that heritage and construct a "distinctly professional knowledge". Historians of economic thought therefore treat the late-19th-century marginalist and early neoclassical turn as part of the broader transformation of "political economy" into "economics," which is a narrower and more mathematical discipline that is separated from history, politics, and other social sciences. The term "economics" gradually displaced "political economy" as the mainstream name of the discipline, especially after Marshall's Principles of Economics in 1890. 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.
Contemporary definition In the contemporary context, the definition of political economy has changed. Contrary to the modern terms of economics and political science, political economy now refers to the interdisciplinary study of the mutual relationship between politics and economics, that is:
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