Political Economy

The course aims at providing a basic knowledge of the concepts and analytical tools of political economy. The nature of capitalism and the world economy are first addressed, with a historical and systemic perspective, considering the evolution of technologies, capital, labour, and phases of development. The evolving boundaries between market and non-market activities, the role of social reproduction, and the relationships between the economy, nature and the environment are discussed.

The macroeconomic analysis at the national level investigates different dimensions of economic activities, and their interactions, addressing (i) the production system, using capital, labour and technology to supply goods; (ii) the market for goods where demand appears; (iii) the role of money, shaping prices, interest rates, liquidity for transactions and financial investment; (iv) the labour market, where labour is hired; (v) the distributive process, where national income is divided between wages, profits and rents, shaping domestic inequalities.

The role of the State in guiding such activities and in providing public services outside the market is also addressed, considering the dynamics of taxation, public expenditure and government debt. The policies addressing each of the above processes include: structural, industrial and technology policies for shaping the production system and supply; demand-side fiscal policies; monetary policies; labour policies; distributive policies.

A closed-economy perspective, however, is inadequate to understand current processes; each of the above dimensions is driven by transnational dynamics including (i) the system of international production organised by large multinational corporations, driving the flows of technology and investment; (ii) international trade and the flow of goods and services affecting patterns of demand; (iii) the world monetary and financial system organised by Central Banks and stock markets, shaping prices, currency markets, capital flows, international investment; (iv) the international movements of labour and migrations; (v) the distributive outcomes in a hierarchical world system, shaping world inequalities.

In such a context, the role of nation States is reduced and multilateral insitutions and forms of international governance have emerged, closely related to the hierarchical nature of the State system. Complex forms of regulation and changing rules now affect transnational economic processes.

The microeconomic behaviour of firms and individuals is also investigated. The logic of business in making choices about production, technology, investment, prices, profits is shaping the production system. The logic of individuals in making choices on the use of time, work, learning, consumption, savings and types of social interactions shape demand, labour and distribution.

The perspective that is adopted moves beyond the neoclassical view of markets in equilibrium, considers power relations and hierarchies in economic activities, the conflict between capital and labour and the broader contention over economic issues. The limits of political economy and its interactions with other disciplines – politics, sociology, behavioural sciences, ecology – are finally examined.