Differences Between Mainstream and Political Economics
Uploaded by spootyhead on Feb 19, 2007
Differences Between Mainstream and Political Economics
The fundamental distinction between mainstream economics and the political economy approach to economics is how we define and measure the economy. More importantly, how do we equate the performance of our economy to the overall quality of life experienced within the economy. The differences between the two approaches are uncanny. They range from topical calculus to philosophy. Another vast difference is the focus on individual behavior compared to society as a whole. What both mainstream and political economics do have in common, however, is that they are both, in essence, a study of human behavior. This creates even greater distinction between the two, as political economists argue that human behavior cannot be quantified, while mainstream beliefs hold that we all follow rational behavior. The enormous difference in views of human nature and the separate methodological approaches are what fundamentally distinguish mainstream and political economics.
Mainstream economics begins with the individual. Micro and macro economics courses teach us that we all, always behave rationally and always in our best self-interest. We are driven to maximize the utility of the goods and services produced and sold in markets. Also, it is economic gain that motivates us all to buy, sell and work. In mainstream economics, we are all termed, “economic man.” This implies that it is our inherent human nature to behave in ways that will offer us personal gain. Do we not have any other motivating forces in our nature? Can anyone validly deduce that this is in fact a universal human trait? Political economists would disagree. Fundamentally, the individual is a part of a larger group. Furthermore, the group, part of a particular place and time. This has separate implications altogether. What’s more is that human behavior is not readily predictable by any means. In fact in many cases, especially with consumers, it is completely irrational. The emotional attachment between advertisements and products we experience is a great example of irrational behavior in economics. The fact that humans are social beings is a natural tendency that political economists look at. We behave in context to the various relationships among us. This is why we are all interdependent and how we all fit into society.
In the political economy approach, the social institutions and their implications form the basis of the methodology. These involve the lenses of politics, psychology, sociology and history. Mainstream economics is rooted in...