Political Economy*

The term 'political economy' has a long and curious history, from its 17th-century meaning of statecraft to the classical economists' use of it for what later came to be called economics and its recent appropriation by neo-Marxists for social theory which, in contrast to 'orthodox' economics, goes into history, politics and sociology, focuses on power relationships and combines positive analysis with advocacy. This article points out that there are now at least two schools of political economy in this tatter sense, the neo-Marxist and the 'Chicago' school. The concluding section distinguishes sensible and not so sensible uses of the term.     

Political Economy of Conditional Aid in a Federal Economy

This paper employs a political economy approach to model the joint determination of national and subnational sectoral protection in an open federal economy. Political interactions between special interest groups and policymakers as well as economic interrelationships between federal and state government policies are analyzed. The model is applied to study the effects of conditional financial assistance on policy‐making in the aid‐receiving federal economy. We find that policy‐based financial assistance to the federal government tends to reduce the extent of distortions resulting from the federal government policy. However, if federal and state government policies are strategic substitutes, state government induced policy distortions would increase, thereby detracting from the effectiveness of conditionality in reducing overall policy distortions in the recipient economy.     

The Political Economy of the IRS

This paper tests a multiple principal–agent model of the Internal Revenue Service. Using data for 33 IRS districts over six tax years, 1992–1997, we report evidence that the fraction of individual income tax returns audited is significantly lower in districts that are important to the president electorally and that have representation on key congressional committees. These findings suggest that the IRS is not a rogue government agency, but rather is an effective bureaucratic agent of its political sponsors. "Reforming" the IRS by subjecting it to an independent oversight board appointed by the president would therefore seem to be redundant.     

The Political Economy of the Global Environment

Issues of the ‘global commons’ have secured a prominent place in environmental discourse. The temperature-regulating functions of the global atmosphere and radiation control functions of stratospheric ozone offer clear examples of true public goods. Other environmental assets, such as biodiversity and forests, are treated as if they are public goods, but in reality are complex mixtures of private goods, local public goods and global public goods. The approach to the provision and protection of these goods has tended to focus on the development of international agreements, such as those at the Rio de Janeiro ‘Earth Summit’ in 1992. But do these agreements contain the relevant incentives to conserve the global commons? Much depends on one's view of human nature. The Scottish economic tradition suggests that unless incentives focus on ‘self love’, as postulated by Hume and Smith, improvements will, at best, be marginal. A richer array of policy measures is obtained by analysing the potential for ‘global bargains’, trades that improve the environment whilst making each party better off. The souls of Hume and Smith surely approve recent developments in practical global bargains.     

Political Economy and the Idea of Development

This paper explores the questions: what are the main organizing concepts of the older political economy of Smith and Marx; and how do they differ from those typical of more recent work in political economy? Special emphasis is placed on the importance of an idea of development in the older political economy, and on how that idea has been replaced in the newer political economy by notions of power and interest. The paper considers how the absence of a concept of development in the newer versions of political economy limits the scope and depth of these versions. Recent criticism of the idea of development is also considered. In light of this criticism, the paper considers weaknesses in the concept of development in the older political economy. However, rather than fully accepting the critique of the idea of development, the paper suggests that weaknesses in the classical construction can be corrected by paying closer attention to how we understand the ends of the development process.     

The Political Economy of the Kuznets Curve

The paper provides a political economy theory of the Kuznets curve. When development leads to increasing inequality, this can induce political instability and force democratization on political elites. Democratization leads to institutional changes which encourage redistribution and reduce inequality. Nevertheless, development does not necessarily induce a Kuznets curve, and it is shown that development may be associated with two types of nondemocratic paths: an "autocratic disaster," with high inequality and low output, and an "East Asian Miracle," with low inequality and high output. These arise either because inequality does not increase with development, or because the degree of political mobilization is low.     

Political Economy of Course Evaluations

Professors Hansen and Kelley suggest practical guidelines for implementing course evaluation systems, drawing upon their experience at the University of Wisconsin. They develop a model to conceptualize course evaluations in the context of the professor's decision-making framework, focusing upon the allocation of time between teaching and research. Costs and benefits associated with collecting evaluations are considered, and ways of minimizing the former and maximizing the latter are suggested.     

金融发展的政治经济学

本文运用125个国家和地区的数据首次系统地检验了金融发展的政治经济学理论.我们研究发现,金融利益集团的力量对金融发展有着显著稳定的负面作用,即使我们控制了一国经济发展水平、政治制度、法律制度、文化传统以及地理禀赋等因素,结果仍然是显著而稳定的.同时,我们研究还发现,金融发展的政治经济学理论能够很好地解释中国国有商业银行改革的逻辑.因此,我们需要重新检讨中国既有的国有商业银行改革的路径.本文的结论是:加大开放的力度,削弱金融利益集团的影响,构建竞争性的银行业结构将有利于中国金融的良性发展.