Global Political Economy - Essay Example

Order: 340436 What three main developments first emerging in the period 1400 to 1800, led to the creation of what we now understand to be a truly Global Political Economy. Introduction The term “political economy” was first used by the French mercantilist Antoine de Montchestein in his Treatise of Political Economy (1615), which contained recommendations on how to run the state economy and multiply the country’s wealth (Allen, 1988; William, 2000). The term “political economy” was derived from the Greek words ‘politikos’ (state or social) and ‘nomos’ (rule or law) and so meant ‘the laws of state management’. Political economy appeared as a science during the emergence of the capitalist mode of production and, it has always been a class science. Its representatives have always expressed the interests and ideology of a definite class and have tried to justify the economic policy of corresponding to its interests. The history of political economy during the period of 1400-1800 can be classified into 1) the Mercantilism, 2) Bourgeoisie and 3) the emergence of communist ideas (Utopian Socialism). This period can broadly be termed as ‘Pre-Marxian’ period of political economy (Ilyin and Motylev, 1986; Volkove, 1985). 1. Mercantilism The first systematic attempt to understand the economic phenomena of the nascent capitalist system and to justify the state’s economic policy was mercantilism. The main representatives of mercantilism were William Staffford and Thomas Mun in England, Antonio Serra in Italy, Antonoine de Montchrestien in France, A.L. Ordin-Nashchekin and I.T.Pososhkov in Russia. The Mercantalists believed that trade was crucial to the economy, and that gold and money were the main form of wealth. Mercantilists believed that profit is created in the realm of circulation, while money is the wealth of the nation. Therefore, the policy of mercantilism was aimed at attracting to the country as much gold and silver as possible. Their aim was to accumulate currency within the country by exporting goods to a foreign market. The policy of a favourable money balance was replaced by the trade balance policy. Mercantilism regarded foreign trade as a source of wealth and, since export goods were manufactured by artisans, the mercantilists concluded that the handicraft industry had to be developed. They demanded vigorous state intervention in the economy in the interests of the merchants and advanced the following principle: to buy cheaper and to sell dearer, seeking an active trade balance. With that aim in view, the mercantilist proposed an expansion of foreign trade in order to obtain gold in return for goods while preventing its export. They believed that the state should follow a protectionist policy: encourage the development of national industry working for export and , at the same time, limit the import of goods which have to be paid for in gold. Although the mercantilist theories stemmed from a description of superficial phenomena in the process of circulation, they were the first theoretical generalization of bourgeois ideas. Mercantilism began to decline in the mid 17th century because, as capitalism developed, capitalist production became the main way of increasing wealth. Marx called mercantilism the pre-history of political economy. Mercantalism was progressive for its time, since it facilitated the development of the first big capitalist enterprises – manufactories- and encouraged the development of the productive forces and the victory of capitalism over feudalism. But as capitalism developed, the main propositions of mercantilism became outmoded and the bourgeoisie advanced new economic theories based on the requirements of free trade and free enterprises. Physiocratism replaced mercantilism as a trend of bourgeois economic thought. 2. Capitalist mode of production- Physiocracy and Classical Bourgeois Political Economy The subsequent, second stage in the development of political economy corresponded to the period when the capitalist relations of production came into existence. The remarkable characteristic of economists at that stage was a firm belief in the capitalist mode of production and an earnest effort to clarify its laws. It is during this period that political economy reached the highest point possible from a bourgeois perspective. The capitalist relations of production, which were object of political economy, had fundamentally developed to a point where they constituted an actual fact that did not have to be imagined. No longer the laws of an ideal world, they had become the fundamental laws that govern reality to its core. In other words, they had become the “principles of political economy” (North, 1981). Physiocracy is a school of thought founded by François Quesnay (1694-1774), a court physician to King Louis the 15th. At one point in time Physiocracy constituted a sort of religious movement that attracted a number of outstanding and extremely fervent believers, and exerted no small influence on real politics. The history of the Physiocratic movement is thought to have begun in 1757, when Quesnay met Mirabeau the elder (1715-89), and come to an end in 1776, with the fall of Turgot (1727-81). The term “physiocracy” apparently came into general use after having first appeared in 1767, with the appearance of a collection of Quesnay’s works. The term is of course a combination of “physio” (nature) and “cracy” (rule), thus meaning the “rule of nature”. This expresses the school’s fundamental idea that there is a natural order, as opposed to artificial systems, and that the mission of scholarship and politics being to understand this natural order and bring it into existence, thereby bringing about this rule of nature. In contrast to mercantilists, they switched the emphasis from the sphere of circulation to the sphere of production and so laid the ground work for an analysis of capitalist production, eventhough they confined the sphere of production to agriculture, while mistakenly including industry in the non-productive sphere of the economy (Arndt, 1987). Criticizing mercantilism, the physiocrats thought that the government had to focus attention not on the development of trade and the accumulation of money, but on the creation of an abundance of the ‘fruits of the earth’, in which they claimed the real wealth of the nation, lay. The problem of ‘surplus value’ or of ‘net product’ which they pictured as a certain increase in use values, and not as a value increment, underlay the physiocratic economic theory. They regarded nature as the only source of wealth and therefore, saw surplus value as nothing but a physical gift of nature. They held that agriculture was the only branch where the net product was produced. The physiocrats called those engaged in agriculture the productive class. They identified industry as a ‘barren’ sphere which did not create ‘net product’ and therefore thought that workers engaged in industry were a barren class. The physiocrats are credited with moving the question of the origin of social wealth and surplus value from the sphere of circulation to the that of material production (though it was limited to agricultural production). Thus, they laid the scientific ground work for the analysis of capitalist production as a whole. The physiocrats advocated unlimited rule of private ownership, free competition and free foreign trade. The most valuable part of their theory was that they based the status of classes in society on its economic structure. The scientific merit of the physiocrats is that unlike the mercantilists, who identified capital with its money from in which it operates in the sphere of circulation, they regarded capital in the form it assumed in the production process. They laid the foundation for a scientific analysis of capital and circulating capital in the form of a theory of initial and annual advanced money. The physiocrats were the first in the history of economic thought to examine the laws of reproduction and distribution of the aggregate social product under capitalism (Quesnay’s Table). Classical Bourgeois Political Economy was a progressive trend in bourgeois economic thought which arose in the period of the establishment of the capitalist mode of production and the underdeveloped class struggle of the proletariat. It protected the interests of the industrial bourgeoisie in its struggle against feudalism. Its outstanding representatives were William Petty, Adam Smith and David Ricardo. Classical Bourgeois Political Economy is one of the sources of Marxism. They laid the foundation of the labor theory of value, and made the first attempts to examine certain forms of surplus value and to study capitalist reproduction. For this they used a new method, i.e., to penetrate the heart of the matter by using the scientific concepts. It failed to realize that economic categories expressed the relations of social production, and that under capitalism these relations are fetishised and represent the social properties of things. A major achievement of classical bourgeois political economy was the discovery the labor theory of value. The theory established that the value of product is determined by the labor required for its manufacture. They noticed that the value of a certain commodity is inversely proportional to labor productivity (Weinganst and Wittman2006). Classical Bourgeois Political Economy laid the corner stone for the analy sis of capital. While discussing the structure of capital, the representatives of Classical Bourgeois Political Economy noticed the difference between fixed and circulating capital. They could not, however, see in capital the expression of production relations. They associated capital with its physical forms such as money, means of production and commodities. In subsequent to Classical Bourgeois Political Economy, certain developments of bourgeois came into existence by pointing out the contradictions of capitalism and by incorporating vulgar elements. These development may generally be confined to ‘Pretty Bourgeois Political Economy’ and ‘Vulgar Bourgeois Political Economy’. The decay of Classical Bourgeois Political Economy was accelerated by the fact that the Utopian Socialists, being the first spokesmen of the working people’s interests, tried to turn the labor theory of value against the bourgeoisie by advancing the slogan that the working people had the right to the whole product of their labor (Grief, 2006). 3. Utopian Socialism The term ‘Utopian Socialism’ originates from the title of the book Utopia by Th. More. Embryos of socialist ideas which contained aspirations for liberty were expressed in the Middle Ages as a reaction to the advent of private property and the exploitation of man by man. The Utopian Socialism of the 16th century contained the initial elements of criticisms of nascent bourgeois society and the desire to build a genuinely humane society. They called for a society of reason that would be based on public property and the universal organization of the economy. They criticized the bourgeois society and demanded the change to a society which would guarantee liberty and the benefits of life for all. After the French Revolution, the French revolutionary, Francois Noel Babeuf was the first to attempt a communist revolution and to prove the need for a proletarian dictatorship (O’hara, 1999). A new school of critical Utopian socialism emerged in their first quarter of the 19th century in the context of the increasing conflicts between the proletariat ant eh bourgeoisie. Because the working class movement was still spontaneous, Utopian Socialism, which expressed the hopes and aspirations for the working people, was then popular. Speaking of Utopian Socialism as the close forerunner of scientific communism, Lenin also noted its radical difference from scientific socialism. They criticized bourgeois society, envisioned its destruction and dreamt of a better society. The main contribution of Utopian Socialists was their criticism of capitalism, its vices and its contradictions from a materialist position. They envisioned the society of the future as a society of plenty which would insure satisfaction of human requirements and flourishing of the personality. On the other hand, they gave more attention to the details of such a society than to the means of attaining it. The valuable and progressive in the teaching of the Utopian Socialist, their criticism of bourgeois system, contributed to the education of the workers. The embryos of the great ideas about the socialist system were highly appreciated by Karl Marx and Frederick Engels. They assimilated everything valuable in the teaching of the Utopian Socialists and gave it a scientific explanation. Marx and Engels created genuinely scientific, proletarian political economy, gave concrete proof of the historically transient character of the capitalist mode of production, revealed the laws of its development and proved that it would be inevitably replaced by the communist mode of production. To them, the main sources of this concrete formulation of the theory of Communist Mode of Production were the above discussed political economies of bourgeois and Utopian Socialism. References Higgs, Henry (2001). The Physiocrats: Six Lectures on the French Économistes of the 18th Century. Batoche Books, Canada. Kitchener, Volkove, M. I. (1985). A Dictionary of Political Economy. Progress Publishers, Union of Soviet Socialist Republics. Moscow, Ilyin, Sergei and Alexander Motylev (1986). What is Political Economy? Progress Publishers, Union of Soviet Socialist Republics. Moscow, Allen, P.M. (1988) “Evolution, Innovation, and Economics,” in G.Dosi, C.Freeman, R.Nelson, G.Silverberg, and L.Soete, eds., Technical Change and Economic Theory. London. Pinter, Thompson, William, R.(2000). The Emergence of the Global Political Economy. London, Routledge, North, D. C. (1981). Structure and Change in Economic History .New York. Cambridge University Press, Weinganst, Barry R. and Wittman, Donald (2006). The Oxford Handbook of Political Economy. Oxford University Press. Oxford. Arndt, H.W. (1987). Economic Development:The History of an Idea, Chicago. University of Chicago Press, Grief, Avner (2006). Institutions and the Path to the Modern Economy- Lessons from Medieval Trade-Cambridge University Press, Newyork. Cambridge, O’Hara, Phillip, Anthony(1999). Encyclopedia of Political Economy, Routledge, London. New Fetter Lane, Read More