1. Introduction to Political Economy
“The parallel existence and mutual interaction of “state” and “market” in the modern world create “political economy”; without both state and market there could be no political economy.”
– Robert Gilpin
In its essence, the political economy constitutes the intersection between economics and political science.
Political economists emphasize that the political sphere and the economy cannot be analyzed individually as they are deeply interwoven and dependent on each other: Politics, so they argue, provide the rules of the game for the economy. Simultaneously, economic actors often use their power to exert influence on the political decision-making process in order to change those rules in their favor. That way, political forces shape systems of economic interactions which in turn affect those forces. Hence, in this perspective, economic processes become inherently political and vice versa.
Based on this standpoint, the political economy is a very critical academic tradition as its point of departure is the criticism that contemporary mainstream economics focus too much on abstract modeling and have a narrow understanding of what belongs to the economic realm. To counter that, the political economy has an interdisciplinary orientation as its scholars believe that sciences such as sociology, history, international relations, and cultural studies can also help us achieve a better understanding of how politico-economic dynamics work and how they affect us.
As political economists often concern themselves with the “bigger picture”, they pay a lot of attention to ideologies (you can find an explanation of this term in the political science part). Traditionally, each ideology is convinced that it is truly the best solution to enhance the prosperity of a society, that is why political economists study them in-depth to find out how they can be applied to the real world and where they have theoretical faults. Certain ideologies manage to become “hegemonic”, i.e., they are implemented in a majority of countries worldwide and deeply shape our thinking about the world around us. Here, political economists study how those ideologies managed to achieve that and which actors or institutions supported this trend.
Hegemony was heavily inspired by the field of political economy as it shows the interrelation between economic and political processes and forces the players, as the representatives of different socio-economic groups, to decide how they want to allocate their resources in each given context. As such, in this section you will find extensive explanations of the five most important ideologies we implemented in the game: Neoliberalism, Social Democracy, Socialism for the first five policies, and Nationalism and Globalism for policies number six and seven.
Thereby, the following politics table will be your guide:
