In the late 19th century, the term economics came to replace political economy, coinciding with the publication of an influential textbook by Alfred Marshall in 1890. Earlier, William Stanley Jevons, a proponent of mathematical methods applied to the subject, advocated economics for brevity and with the hope of the term becoming "the recognised name of a science."
Today, political economy, where it is not used as a synonym for economics, may refer to very different things, including Marxian analysis, applied public-choice approaches emanating from the Chicago school and the Virginia school, or simply the advice given by economists to the government or public on general economic policy or on specific proposals. A rapidly growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of economic policies, especially as to distributional conflicts and political institutions. It is available as an area of study in certain colleges and universities.
Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organized in nation-states. In that way, political economy expanded the emphasis of economics, which comes from the Greek oikos (meaning "home") and nomos (meaning "law" or "order"). Thus, political economy was meant to express the laws of production of wealth at the state level, just as economics was the ordering of the home. The phrase économie politique (translated in English as political economy) first appeared in France in 1615 with the well-known book by Antoine de Montchrétien, Traité de l’economie politique. The French physiocrats, along with Adam Smith, John Stuart Mill, David Ricardo, Henry George, or Karl Marx were some of the exponents of political economy. The world's first professorship in political economy was established in 1754 at the University of Naples Federico II, Italy (then capital city of the Kingdom of Naples). The Neapolitan philosopher Antonio Genovesi was the first tenured professor. In 1763, Joseph von Sonnenfels was appointed a Political Economy chair at the University of Vienna, Austria. Thomas Malthus, in 1805, became England's first professor of political economy, at the East India Company College, Haileybury, Hertfordshire. Glasgow University, where Adam Smith had been Professor of Logic and of Moral Philosophy, changed the name of its Department of Political Economy to the Department of Economics (ostensibly to avoid confusing prospective undergraduates), in the academic year 1997–98. This left the class of 1998 as the last to be graduated with a Master of Arts in Political Economy.
In its contemporary meaning, political economy refers to different, but related, approaches to studying economic and related behaviours, ranging from the combination of economics with other fields to the use of different, fundamental assumptions that challenge earlier economic assumptions:
New political economy may treat economic ideologies as the phenomenon to explain, per the traditions of Marxian political economy. Thus, Charles S. Maier suggests that a political economy approach "interrogates economic doctrines to disclose their sociological and political premises.... in sum, [it] regards economic ideas and behavior not as frameworks for analysis, but as beliefs and actions that must themselves be explained." This approach informs Andrew Gamble's The Free Economy and the Strong State (Palgrave Macmillan, 1988), and Colin Hay's The Political Economy of New Labour (Manchester University Press, 1999). It also informs much work published in New Political Economy, an international journal founded by Sheffield University scholars in 1996.
Anthropologists, sociologists, and geographers use political economy in referring to the regimes of politics or economic values that emerge primarily at the level of states or regional governance, but also within smaller social groups and social networks. Because these regimes influence and are influenced by the organization of both social and economic capital, the analysis of dimensions lacking a standard economic value (e.g., the political economy of language, of gender, or of religion) often draws on concepts used in Marxian critiques of capital. Such approaches expand on neo-Marxian scholarship related to development and underdevelopment postulated by André Gunder Frank and Immanuel Wallerstein.
Historians have employed political economy to explore the ways in the past that persons and groups with common economic interests have used politics to effect changes beneficial to their interests.
Because political economy is not a unified discipline, there are studies using the term that overlap in subject matter, but have radically different perspectives:
Sociology studies the effects of persons' involvement in society as members of groups, and how that changes their ability to function. Many sociologists start from a perspective of production-determining relation from Karl Marx. Marx's theories on the subject of political economy are contained in his book Das Kapital.
Anthropology studies political economy by investigating regimes of political and economic value that condition tacit aspects of sociocultural practices (e.g., the pejorative use of pseudo-Spanish expressions in the US entertainment media) by means of broader historical, political, and sociological processes. Analyses of structural features of transnational processes focus on the interactions between the world capitalist system and local cultures.
Archaeology attempts to reconstruct past political economies by examining the material evidence for administrative strategies to control and mobilize resources. This evidence may include architecture, animal remains, evidence for craft workshops, evidence for feasting and ritual, evidence for the import or export of prestige goods, or evidence for food storage.
Psychology is the fulcrum on which political economy exerts its force in studying decision making (not only in prices), but as the field of study whose assumptions model political economy.
History documents change, often using it to argue political economy; some historical works take political economy as the narrative's frame.
Human geography at times draws on theories of politico-economic processes. Typically under the moniker of political ecology, political ecology has been used by geographers to understand human systems and their relationship with the environment, broadly defined.
Ecology deals with political economy, because human activity has the greatest effect upon the environment, its central concern being the environment's suitability for human activity. The ecological effects of economic activity spur research upon changing market economy incentives.
Cultural studies examines social class, production, labor, race, gender, and sex.
Communications examines the institutional aspects of media and telecommuncation systems. As the area of study focusing on aspects of human communication, it pays particular attention to the relationships between owners, labor, consumers, advertisers, structures of production, and the state, and the power relationships embedded in these relationships.
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