On October 18, about 200 students held a “Save Political Economy” demonstration at the University of Sydney, organised by the Political Economy Students Society (EcopSoc).
The university administration is considering abolishing political economy as a separate department.
The department was established in the 1970s after a big campaign of protests and occupations by students and staff who wanted economics courses that taught a wide range of theories — not just the right-wing orthodoxy.
Emma Bacon, a former EcopSoc president who chaired the protest, spoke to renowned US Marxist economist and Monthly Review editor John Bellamy Foster about the importance of teaching political economy.
Bellamy Foster was in Australia for the World at a Crossroads: Climate Change Social Change conference held in Melbourne over September 30-October 3.
Bellamy Foster explains that, unlike mainstream economics, political economy deals explicitly with questions of power and class relations. In other words, economics is not politically neutral, but bound up with political structures.
The global protests, from Athens to New York, fuelled by anger at how governments have bailed out the big banks and sought to make working people pay for the crisis, show why such an approach is so important. See the SaveEcop Facebook group.
* * *
Why do you think it is important for activists and students to learn about political economy?
When I introduce political economy to students, I distinguish between political economy and economics. Political economy in the classical sense meant a picture of the economy in which class and power, social relations, were central to our understanding of the economy.
This is true of Adam Smith, David Ricardo, Karl Marx and John Stuart Mill. It obviously went across from liberal to radical.
What distinguishes classical political economy is that it understood everything in terms of class relations, production and questions of power.
United States economist Edward Nell wrote a piece on the revival of political economy, way back in the 1970s or early '80s, in which he actually drew a picture of the classical political economy perspective — in which you see class relations.
In classical political economy, profit is the form of income attached to the capitalist class, rent is associated with landed capital and wages are the income of the working class.
The whole notion of the structure of the economy, how it works, in terms of production, distribution, the rule of the state, was all in terms of class and power.
From about the 1830s or 1840s, they started to introduce a very different picture of the economy, which became neoclassical economics by the late 19th century.
This was a view of the economy with a picture of a self-regulating market and instead of it being relations between classes it’s simply exchange relationships between business, households and government and so on.
The class and power dimensions are completely removed from the picture of the economy.
In fact, you will find that within this period in the 1840s and '50s, you have one social science; political economy was the original social science.
It was then split into three different disciplines; economics, which got the market, but excluded class and the state; political science, which got the state but excluded class and the market; and sociology, which got class, but excluded the market and the state.
So it was split apart into these three different dimensions, and it was impossible to really have an effective understanding of how society and social relations worked.
Economics in particular was reified very abstractly with all class and productive relations and power relations removed from analysis.
So everything was seen in terms of the self-regulating market, which goes on all the way to Friedrich Hayak.
There were some, like John Maynard Keynes or Vthorstein eblen, or even Joseph Schumpeter on the more conservative side, who moved towards a more political economic conception to some extent. They became more sociological in their analysis because they brought class into the picture.
Generally, [mainstream] economics is defined by the exclusion of class and power relations. But the real way in which the economy works is based on class and power, so these reifications prevent us from understanding how the economy works.
This approach actually hoodwink economists themselves, who aren’t able to really understand what’s going on because they’re working with abstract, meaningless and increasingly artificial models removed from the real world. They have almost no knowledge of the real world.
If you read the business or financial literature, you’re more likely to find a class analysis of power relations, which is more closely related to political economy, because they’re dealing with the real world. They have to bring some of those aspects into it, regardless of what side they’re on or what their perspective is. They are realists. Economists, however, are not realists.
We approaches such as political economy that can bring together the different areas and give us a real world perspective to help us understand the crises we’re living through.