Introduction to Political Economy - Assignment Example

Introduction to Political Economy Section Ontology Ontology refers to the philosophical study of the nature of becoming, being, existence or reality plus the main categories of being, as well as their relations (Griswold 237). Being a sub branch of metaphysics, ontology answers questions about what entities exist, plus how these entities can be grouped, linked within a hierarchy plus subdivided in line with their differences and similarities. Even though, ontology as a philosophical area is academic, because it is inseparable from every thinker’s epistemology, it has realistic application in both information technology and information science, wherein it informs ontologies with selected taxonomies (Griswold 237). Ontology helps in sharing knowledge concerning reasoning methods or problem solving strategies. Ontological study explains any knowledge structure. In any domain, its ontology creates the heart of its system of knowledge symbol for that particular domain. Thus, if we lack ontologies, or the perceptions, which guide knowledge, then there cannot be a vocabulary for defining knowledge (Griswold 237). Ontologies also allow knowledge Sharing. Suppose we perform a test and reach an acceptable set of perceptions, plus their representative phrases, for some field of knowledge—for instance, the electronic-devices domain, the resulting ontology will most probably contain domain-specific terms like diodes and transistors; general terms like functions, modes, and causal processes; and terms, which describe behavior like voltage (Griswold 237). Methodenstreit Methodenstreit refers to a financial controversy that started in the mid 1880s and went on for more than a decade between the German Historical School and the Austrian School (Menger 24). The argument between the two was about the place of general theory in social science along with the use of history in elucidating the dynamics of human behavior and action. The arguments also touched on the political and policy issues such as the roles of the state and citizens (Menger 24). However, methodological issues were highest and some former members of the Austrian School backed, as well, a form of welfare state, as highly supported by the Historical School. The two individuals who were responsible for developing the views for the Austrian School and the Historical School were Carl Mender and Gustav von Schmoller, respectively (Menger 24). As human nature stands, it is inevitable in any region were market exchange and the division of labor have attained such a force that people’s subsistence relies on other people’s conduct. In such a civilization, everyone is served by his or her fellow countryman, and, in their place, serve others (Menger 24). Methodenstreit dictates that these services should be rendered voluntarily so as to make people do something for others (Menger 24). Positivism Positivism, in philosophy, is any system, which limits itself to the data of experience and fails to include a metaphysical or priori speculations (Positivism 1). It holds that society functions in line with general laws. Intuitive and introspective knowledge is rejected, as is theology and metaphysics (Positivism 1). Even though, the positivist method has been a key theme in the western thought, the contemporary sense of the method was developed early in the 19th century by Auguste Comte. He claimed that a majority of the physical world functions in line with gravity and other absolute laws just like society (Positivism 1). When it comes to its significance, positivism is a knowledge theory wherein the only kind of sound knowledge that humans can access is that science rooted in observation and it is a unit of science thesis wherein all sciences can be incorporated into a one natural system (Positivism 1). This approach is significant since it explains how to define what the invariant implication of a physical speculation is; it is in the observations. Therefore, any two mathematical explanations with the same observations are to be recognized, they are simply identical. They are not unlike in any manner, apart from the manner in which they are explained in words (Positivism 1). Methodological individualism Methodological individualism is a social sciences doctrine about the relationship between individuals and "society". Its significance arises from the fact that the idea can be created in a number of different, but related ways (Epstein 187). For instance social facts are formed by facts concerning people; social entities are formed by individuals plus their relations and properties; social entities and structures are ensembles of people and their actions; social explanations should be derivable from facts concerning people; scientific statements concerning society must be reducible to statements concerning individuals and their relations and properties; social generalizations or laws should be derivable from basic facts about people (Epstein 187). Labor Theory of Value Labor theory of value refers to an economic theory that specifies the value of a product is reliant upon the labor utilized during its production (Enique 10). It puts across that products that take the same amount of time to produce ought to cost the same. Opponents of this theory contend that it is not labor that decides the price of a product, but its supply and demand function (Enique 10). However, if the cost of buying a product is higher compared to the amount, which the buyer values the period it would require to fabricate the good, then he or she will make it himself instead of buy it (Enique 10). Laissez-faire Laissez-faire is an economic doctrine that dictates that an economic system ought to be free from the moderation or intervention of the government, and only influenced by forces of the market (Miller 10). Centered on the thought that people are innately influenced by their self-interest, a balanced system of productions, as well as exchange rooted in mutual gain, arises. Laissez-faire is significant because it created the market we have these days. It is what drives free trade (Miller 10). Laissez Faire means that everyone is free to compete and risk the capital in an entrepreneurial world with a view of making profit. This means that people are free to exercise their free will (Miller 10). Friedrich List Friedrich List was a German-American economist who held that tariffs on imported goods can significantly kindle local development (Selwyn 157). He also endorsed the free exchange of local goods, and he was celebrated as secretary and founder of the association of middle and southern German industrialists who wanted to eliminate tariff barriers in the German states (Selwyn 157). List advocated changes in Germany’s civil service and encouraged improved publicity of judicial procedures. In America, List argued that a state economy in a premature stage of industrialization needs tariff protection (Selwyn 157). He maintained that the costs of a tariff ought to be considered as an investment in a country’s future productivity. John Maynard Keynes John Maynard Keynes was an author and economist known for his views that governments ought to endorse the effects of expansion and contraction in the business cycle through utilizing monetary and fiscal policies (Clarke 16). He is considered as one the founding father of modern day macroeconomic theory, and his perceptions on financial theory have grown into a subset of financial theory referred to Keynesian Economics (Clarke 16). He was one of the groundbreaking financial experts of his day and developed a number of innovative ideas, which were accepted by the world. A number of governments started to use financial statistics after his theories including employment and interest rates after his efforts (Clarke 16). Clientelism Clientelism refers to the relationship between people with uneven socio-economic status, which comprises of the reciprocal exchange of products rooted in a personal link perceived in reference to moral obligation (Roniger 353). Defined in this manner, clientelism is an occurrence that has happened in many diverse social contexts, be it between bosses and their client in today’s business world, between serfs and their lords in feudal periods, or between large peasants and landowners in many rural communities (Roniger 353). Clientelistic relations did not vanish with the arrival of modern states, but throughout this process, these links have been change in a number of ways (Roniger 354). Spontaneous Order Spontaneous order refers to the spontaneous surfacing of order out of apparent chaos. It can be found in biological, physical social networks and economics (Petsoulas 20). The development of life on Earth, crystal structure, language, a free market economy and the Internet have all been claimed as cases of systems that grew through spontaneous order. Naturalists frequently point to the intrinsic "watch-like" accuracy of fallow ecosystems and to the world itself as final cases of this phenomenon (Petsoulas 20). Spontaneous order is also utilized as a synonym for any developing behavior of which self-concerned spontaneous order is only an instance (Petsoulas 20). Section 2 Question 2 Institutional economics centers on comprehending the role of the evolutionary process, as well as the role of institutions in forming economic behavior. It has greatly been established that institutions are key sources of economic growth across the globe. Among other things, institutions have significant influence on investments in human and physical capital, industrial and technology production (Pereira and Teles 1). It is well comprehended that apart from having a leading role in economic development, institutions are significant in influencing resource distribution. As an impact, some people or groups will be able to benefit more than others provided the set of preexisting economic conditions, as well as resource allocation. In essence, institutions are endogenous and echo a constant conflict of interest between people and groups over the decision of economic institutions, as well as the distribution of resources (Dunleavy 56). The popular institutional design of institutions thus relies mainly on the allotment of political power between elite groups. Political institutions, informal and formal, determine both the incentives and constraints experienced by vital players in any society (Pereira and Teles 1; Dunleavy 57; and Alwyn and Kiyoteru 69). Provided the endogenous element of political institutions and planned allocation of powers they offer, properly selected institutions can aid the development of credible mechanisms able to reduce risks of opportunistic actions of economic and political players. In essence, political institutions have to grant incentives for politicians to obey them frequently in due course (Pereira and Teles 1). In democratic governments, the wider political power is apprehended by a specific political leader, the bigger economic growth will be; but, when it comes to autocracies, such impact is overturned (Alwyn and Kiyoteru 70). Political division also has an opposite impact under authoritarian and democratic regimes. Whereas this variable does not aid authoritarian governments to attain proper economic performance, it does offer a positive impact on democratic regimes. Provided that political institution variables normally propose a certain level of political rights, critics argue that even autocratic governments can have a reasonable economic performance provided that some political rights are offered to society (Pereira and Teles 1). It may suggest, as well, that political institutions function as an alternate to democracy in authoritarian governments, leading to economic growth. In essence, autocracies can distinguish from one another in reference to political institutions (Gilpin 44). That confirms the claim of other researchers who have not yet found significant distinctions between the economic development as a function of political government, either in autocracies or democracies. Thus, this preliminary investigation proposes that instead of just taking into consideration the different forms of regimes as a single “package” (authoritarianism versus democracy), it is vital to decided which form of autocracy and/ democracy or is regarded in the analysis controlling for its individual specific political institutions (Oatley 57 and Gilpin 44). In order to comprehend how diverse institutions influence economic decisions and financial growth, people will need to go past the distinction between non-democracy and democracy. Even though, the adoption of a democratic government is not enough to attain greater economic growth, democracy with proper institutions might be. According to Cliff, without firm institutions, life turns arduous and chaotic, for instance, following the end of the communist governments in Eastern Europe following 1989. The sudden deteriorating of old political bodies, law enforcement, property rights, and other institutions created tremendous confusion as these nations started to shift toward democracy and capitalism. Politics were swamped suddenly with a handful of political parties vying for power in uneven coalitions. Economies were overwhelmed with all types of scam artists, mafia, and other shady groups, which made business unpredictable and, at times, dangerous. Second, institutionalists depend on causal ideas but often, devoid of clearly identifying the key processes or mechanisms through which change happens (Pereira and Teles 1). Therefore, these ideas look like mysterious black boxes whose fillings require being unpacked and analyzed. Finally, many institutionalists have assumed a cultural view claiming recently that ideas, widely interpreted, as well as self-concerns, influence change (Warner 98 and Fowler ed 77). Whether intellectual paradigms, norms, world views, policy frames, as well as other types of ideas, influence institutional transformation are issues, which have produced new research agendas plus a lot of debate among institutionalists functioning in political economy, comparative politics, international relations, and economic, political, and organizational sociology (Pereira and Teles 1). Finally, the critical institutionalism proposed by Jenson and Merand can help us study how institutions arbitrate relationships between natural resources, people and society (Warner 98). It centers on the density of institutions tangled in day to day social life, the interplay between informal and formal, their historical formation, modern and traditional arrangements as well as the power relations that animate them. Jenson and Merand helped us understand how to disentangle the fine mess, the nature of agency, power and authoritative processes, the field of practice putting critical institutionalism into practice and hybrid governance. Works Cited Alwyn, Lim and Kiyoteru, Tsutsui. "Globalization and commitment in corporate social responsibility cross-national analyses of institutional and political-economy effects." American Sociological Review 77.1 (2012): 69-98. Print. Clarke, Peter. Keynes: The Twentieth Centurys Most Influential Economist. Bloomsbury, 2009. Print. Dunleavy, Patrick. Democracy, bureaucracy and public choice: economic approaches in political science. New York: Routledge, 2014. Print. Enique, Dussel. "The Four Drafts of "Capital"" Rethinking Marxism 13.1 (2002): 10. Print. Epstein, Brian. "Ontological Individualism Reconsidered." Synthese 166.1 (2009): pp. 187–213. Print. Fowler, Alan, ed. Striking a Balance: A Guide to Enhancing the Effectiveness of Non-Governmental Organisations in International Development. New York: Routledge, 2013. Print. Gilpin, Robert. Global Political Economy: Understanding the International Economic Order. Princeton: Princeton University Press, 2011. Print. Griswold, Charles L. Platonic writings/Platonic readings. Pennsylvania: Penn State Press, 2001. Print. Menger, Carl. Principles of Economics. New York: New York University Press, 1981. Print. Miller, George. On Fairness and Efficiency. New York: The Policy Press, 2000. Print. Oatley, Thomas H. International Political Economy. Boston: Longman, 2012. Print. Pereira, Carlos and Teles, Vladimir. Political Institutions, Economic Growth, and Democracy: The Substitute Effect. N.p, 2011. Web. Petsoulas, Christian. Hayeks Liberalism and Its Origins: His Idea of Spontaneous Order and the Scottish Enlightenment. New York: Routledge. 2001. Print. Positivism. Marxists Internet Archive. N.p, 2012. Web. Roniger, Luis. “Political Clientelism, Democracy and Market Economy.” Comparative Politics 36.3 (2004): 353-375. Print. Selwyn, Brian. “An Historical Materialist Appraisal of Friedrich List and his Modern Day Followers.” New Political Economy 14.2 (2009): 157-180. Print. Warner, Richard. Recovery from Schizophrenia: Psychiatry and Political Economy. New York: Routledge, 2013. Print. Read More