Philosophy of Society

Philosophy of Economics (Economic Theory)

Political Economy

Political economy, or economic theory, is the science that examines the patterns of economic processes and the interplay between economy and politics. In other words, political economy seeks to answer what the state and social institutions should do to ensure an efficient economy. This question gained prominence as the economy evolved into a complex social institution. In Antiquity and the Middle Ages, political economy did not yet exist; philosophers and theologians of the time wrote about the moral foundations of production and trade, about just prices, and so forth, but not about the laws and principles of economics. With the rise of trade and production, it became essential to conceptualize the foundations upon which the economy rests and to determine what the state should do to promote the wealth of its people. It is these efforts to answer such questions that gave rise to political economy, or economic theory. Several economic theories are distinguished:

• Mercantilism: A theory whose adherents believed that the foundation of a nation's wealth lies in money obtained through trade and advocated for protectionism.
• Classical Economic Theory: A theory centered on the desire to create a free market and limit the role of the state in the economy.
• Marxist Economic Theory: A theory based on planned economy and the rejection of private property.
• Neoclassical Economic Theory: A theory that modified the fundamental principles of classical economic theory.
• Keynesianism: A theory formulated during the Great Depression, which advocated for government intervention in the economy as a means to overcome crises.
• Institutionalism: A theory whose proponents argued that economic institutions are shaped by historical influences, and that understanding economic reality requires acknowledging the past.