Lecture 1: What is Political Economy?
07/09/2022
Starbucks, Rolling Stones, and Fiat listed in the Netherlands
Housing market
○ Who is responsible for housing prices?
○ On Thursday - the EU central bank will come together to decide on interest
rates
■ will likely go up
■ Central banks didn’t use to be independent
● changed in the 70s - now central banks are independent
Inflation
○ has an effect on interest rates → housing
1. Studied the fundamental interconnection between states, society and markets
2. Understands economic politics as a means for achieve their objectives (Strategies for
developments; Schwartz)
3. Considers today and tomorrow's political economics relations and battles from a
historical perspective
● Some time ago slavery, child labour, and the role of women (did not enter the work
market)
○ Due to the change in society, states changed
○ Point of states: that we are fulfilled, to give us the choices to fulfil our
ambitions
■ pursue the wealth of nations
● Battle between generations
○ Housing, debt, sectors of the economy
● The economy is inherently political
○ and much of what is political, is directly related to the economy
● PE is everywhere, and everywhere is PE
Political economy I - the classic thinkers on state and market, and their followers
● The classic thinkers
● Early 20th century: academic divide
● Political economy: Politics + Economics (divided)
● But some remain in the footsteps of the classics
○ Susan Strange
1
,Political economy II - the political science of economic policy fields
● the political science of economic policy domains
● pension system
○ can be divised in different ways
● climate crisis
○ flooding in Pakistan
○ how does the lobbying work between companies
● financial sector, banking
○ it is regulated how much can banks invest your money
○ changed after banking crisis 2008
○ regulating finance
● migration crisis
○ how do borders are enforced, how do they affect migration crisis
○
Political economy III - political phenomena considered from an economics perspective
● Political phenommena considered from an economics perspective
● What is economics?
○ oikos= the family, the family’s property; a large estate or even a village
○ nomos=greek term for law
○ the way we organize society to provide for our needs
1. “the branch of knowledge concerned with the production, consumption
and transfer of wealth”
2. “a branch of the science of a stateman or legislator with the objective
of providing a plentiful revenue or subsistence for the people” (Smith)
3. “combining the assumptions of maximizing behavior, stable
prefreences, and market equilibrium, used relentlessly and
unflinchingly (Gary Becker)
● Economics is:
○ a domain
○ a perspective and approach to study social interaction
■ demand/supply, competition; rational behaviour, homo economicus,
individualism
● Example: trade relations
○ taking an economic perspective on politics
○ Trump imposing trade tariffs on trade with China
Political economy IV - markets and business considered from a political science
perspective
● Markets and business considered from a political science perspective
● Why is there a market is health sector? in housing sector?
○ what is the role of insurance companies? of clients?
2
, ○ about lobbying, domestic and international constraints
● Dutch politicians call for a probe into tax authorities’ handling
Lecture 2: Street Gangs, Mafias and Markets
12/09/2022
The roots of global capitalism:
Geographic expansion of trade goes hand in hand with state formation...
But this plays out differently in different across space and time
States vs Markets
Schwartz: Main argument
● Where you are is crucial in understanding how states emerged in the global
economy
○ Place and distance (space) are crucial to understand the development of states
in the global economy
● Government policies are often crucial to understand if, and if so how countries and
regions develop
○ Who takes advantage of them
○ Governments and states have an active role in how societies develop
● Economic development is a battlefield between political-economic actors:
government, entrepreneurs, and employees
○ Which policy will be pursued depends on a battle between different groups in
society
● He syntheses a number of theoretical insights: Von Thünen, Ricardo, Kaldor,
Gerschenkron, Verdoorn
Europe 1300 - 1700
● Private ownership ↑
● (emergence of) Labor market
● (emergence of) Capital market
● Market for land ↑
● Market for goods and services ↑
● Rules and management for the protection of property, contracts and bankruptcy ↑
● Focus on expansion and growth ↑
● State formation in Europe comes from backwardness
○ all these economies here were more advanced
3
, ○ key difference (with Chinese): they developed into empires and continued as
empires
■ empires back in those days made sense
■ because you had the emperor (complete central control) and he has a
bureaucracy (China)
● he didn’t need nobility to do the things for him
■ Ottoman empire came at the same time as state formation
consolidating in Europe
● as an economic-political system survived all the way to 1923
■ compared to Europe where we didn’t have an emperor
● competition between nobles in Europe led to a different ruling
○ nation-states instead of empires
● Those who dominate the trade routes on land are the most powerful
○ Until someone figures out an alternative
Rise of the West?
Argument by Abu Lughod:
Takes 13th century as starting point
● Cultural differences are important but not sufficient explanations
● Internal and external explanations should be taken into account
○ Competition between nobles in Europe
● Importance of systemic geopolitical and demographic causes
○ black death
○ changes within system
● Spaniards and Portuguese
○ Finding new ways to reach luxury products and spices
■ trying to avoid going through the middle east
○ Creating ships and sailing around Africa → bypassing Middle-East in trade
○ issue of the black death
■ emerged in central Asia
■ implications were different in terms of power
○ Argument: taking the 13th century as the starting point
■ wasn’t clear yet that North-Western Europe to be the one to dominate
the seas
● could have been Middle-East, China → cultural differences
may be important BUT there must be something else
○ competition between nobles in Europe
○ external explanation: geopolitical and demographic
causes
■ black death
4
07/09/2022
Starbucks, Rolling Stones, and Fiat listed in the Netherlands
Housing market
○ Who is responsible for housing prices?
○ On Thursday - the EU central bank will come together to decide on interest
rates
■ will likely go up
■ Central banks didn’t use to be independent
● changed in the 70s - now central banks are independent
Inflation
○ has an effect on interest rates → housing
1. Studied the fundamental interconnection between states, society and markets
2. Understands economic politics as a means for achieve their objectives (Strategies for
developments; Schwartz)
3. Considers today and tomorrow's political economics relations and battles from a
historical perspective
● Some time ago slavery, child labour, and the role of women (did not enter the work
market)
○ Due to the change in society, states changed
○ Point of states: that we are fulfilled, to give us the choices to fulfil our
ambitions
■ pursue the wealth of nations
● Battle between generations
○ Housing, debt, sectors of the economy
● The economy is inherently political
○ and much of what is political, is directly related to the economy
● PE is everywhere, and everywhere is PE
Political economy I - the classic thinkers on state and market, and their followers
● The classic thinkers
● Early 20th century: academic divide
● Political economy: Politics + Economics (divided)
● But some remain in the footsteps of the classics
○ Susan Strange
1
,Political economy II - the political science of economic policy fields
● the political science of economic policy domains
● pension system
○ can be divised in different ways
● climate crisis
○ flooding in Pakistan
○ how does the lobbying work between companies
● financial sector, banking
○ it is regulated how much can banks invest your money
○ changed after banking crisis 2008
○ regulating finance
● migration crisis
○ how do borders are enforced, how do they affect migration crisis
○
Political economy III - political phenomena considered from an economics perspective
● Political phenommena considered from an economics perspective
● What is economics?
○ oikos= the family, the family’s property; a large estate or even a village
○ nomos=greek term for law
○ the way we organize society to provide for our needs
1. “the branch of knowledge concerned with the production, consumption
and transfer of wealth”
2. “a branch of the science of a stateman or legislator with the objective
of providing a plentiful revenue or subsistence for the people” (Smith)
3. “combining the assumptions of maximizing behavior, stable
prefreences, and market equilibrium, used relentlessly and
unflinchingly (Gary Becker)
● Economics is:
○ a domain
○ a perspective and approach to study social interaction
■ demand/supply, competition; rational behaviour, homo economicus,
individualism
● Example: trade relations
○ taking an economic perspective on politics
○ Trump imposing trade tariffs on trade with China
Political economy IV - markets and business considered from a political science
perspective
● Markets and business considered from a political science perspective
● Why is there a market is health sector? in housing sector?
○ what is the role of insurance companies? of clients?
2
, ○ about lobbying, domestic and international constraints
● Dutch politicians call for a probe into tax authorities’ handling
Lecture 2: Street Gangs, Mafias and Markets
12/09/2022
The roots of global capitalism:
Geographic expansion of trade goes hand in hand with state formation...
But this plays out differently in different across space and time
States vs Markets
Schwartz: Main argument
● Where you are is crucial in understanding how states emerged in the global
economy
○ Place and distance (space) are crucial to understand the development of states
in the global economy
● Government policies are often crucial to understand if, and if so how countries and
regions develop
○ Who takes advantage of them
○ Governments and states have an active role in how societies develop
● Economic development is a battlefield between political-economic actors:
government, entrepreneurs, and employees
○ Which policy will be pursued depends on a battle between different groups in
society
● He syntheses a number of theoretical insights: Von Thünen, Ricardo, Kaldor,
Gerschenkron, Verdoorn
Europe 1300 - 1700
● Private ownership ↑
● (emergence of) Labor market
● (emergence of) Capital market
● Market for land ↑
● Market for goods and services ↑
● Rules and management for the protection of property, contracts and bankruptcy ↑
● Focus on expansion and growth ↑
● State formation in Europe comes from backwardness
○ all these economies here were more advanced
3
, ○ key difference (with Chinese): they developed into empires and continued as
empires
■ empires back in those days made sense
■ because you had the emperor (complete central control) and he has a
bureaucracy (China)
● he didn’t need nobility to do the things for him
■ Ottoman empire came at the same time as state formation
consolidating in Europe
● as an economic-political system survived all the way to 1923
■ compared to Europe where we didn’t have an emperor
● competition between nobles in Europe led to a different ruling
○ nation-states instead of empires
● Those who dominate the trade routes on land are the most powerful
○ Until someone figures out an alternative
Rise of the West?
Argument by Abu Lughod:
Takes 13th century as starting point
● Cultural differences are important but not sufficient explanations
● Internal and external explanations should be taken into account
○ Competition between nobles in Europe
● Importance of systemic geopolitical and demographic causes
○ black death
○ changes within system
● Spaniards and Portuguese
○ Finding new ways to reach luxury products and spices
■ trying to avoid going through the middle east
○ Creating ships and sailing around Africa → bypassing Middle-East in trade
○ issue of the black death
■ emerged in central Asia
■ implications were different in terms of power
○ Argument: taking the 13th century as the starting point
■ wasn’t clear yet that North-Western Europe to be the one to dominate
the seas
● could have been Middle-East, China → cultural differences
may be important BUT there must be something else
○ competition between nobles in Europe
○ external explanation: geopolitical and demographic
causes
■ black death
4
