Student Number: 2020-09411-MN-0 Date: November 3, 2021

Name: Salazar, Mary Rose C. Section: BAPE 2-2

DOSSIER 1:

POLITICAL ECONOMY
Political Economy is a term used by Adam Smith, Jean-Jacques Rousseau and John
Stuart Mill to describe their theories. It is a term derived from the Greek words Polis and
Oikonomos which means city or state and one who manages a household or state respectively.
Therefore, Political Economy could be understood as the study of how a country is being
managed or governed. In addition, it is considered as a branch of social science that studies the
relationship between society and individuals, as well as market and state (Veseth, 2020).
Basically, economic theory is the method used to direct the distribution of finite amounts of
resources in a way that benefits as many individuals as possible (Boyle, 2021).

It's critical to be able to distinguish between political and economic issues in order to
recognize when you've crossed the invisible line that separates them. Politics and economics
are linked as several studies have shown, therefore they are analogous to the judiciary and
executive, which are related yet play separate responsibilities. Understanding that in an
economic context, it is critical to ensure that the economist is free of political bias in order to
perform and offer impartial or neutral information. For example, an economist may be a
supporter of a certain politician, and while providing a concept to enhance the nation's economic
status, the once pure notion was tainted by a biased one that ignores variables in the current
circumstances that may or may not benefit the country. This may appear simple, but if that idea
was chosen to be implemented because the economist was able to persuade them, it may
result in more drawbacks than benefits. The same goes with politics; policymakers should know
whether the decision they are about to make is for the good of their people or just for what they
believe is economically beneficial. Presumably, a businessman or businesswoman who later
became a politician attempted to enact a policy for which research is insufficient and which is
solely based on what s/he believes to be correct, putting individuals and companies at risk.
Therefore, understanding what is political and economic is important in the study of Political
Economy since it entails analysis and decision-making.

Politics, economics, and social considerations all play a role in political economy. The
study of power and authority, as well as the exercise of power and authority, is characterized as
politics. In addition, it can also be defined as the study of mechanisms that allow people to make
collective decisions. The subject of how power or authority is acquired and wielded is a subset
of the larger question of what procedures are employed to make collective decisions (Dili &
Cortez, 2020, 5).

Economics on the other hand is a branch of science that studies how people and society
make decisions in general. Individuals and groups in society have a vast array of wants and
needs. There are resources available to meet those desires thus these resources aren't
available for free so they are limited and have alternative uses. Such applications might be
made between now and tomorrow. Therefore, a dimension of choice incorporates current and
future resource consumption. Furthermore, the uses of these resources have costs and
advantages associated with them. Cost and benefit considerations need resource efficiency
(Payumo, 2012, 6).
The word "social" is defined in dictionaries as "anything related to society or
organization." Political economy is a social science that takes place in society, which is the
corresponding definition of social. As economic theories of Political Economy focuses on how it
works in the real world, social plays a big role in it.

To summarize, Political Economy is concerned not just with how politics and economics
interact, but also with how and where they interact. Because the government serves people's
goals and needs through the social system of individuals, these three components are
inextricably linked. To elaborate, economics is the way through which people's demands and
requirements (social) are met.

To summarize, Political Economy is concerned not just with how politics and economics
interact, but also with how and where they interact. Because the government serves people's
goals and needs through the social system of individuals, these three components are
inextricably linked. To elaborate, economics is the means to meet the wants and needs of the
people (social) in which their system could rely on government (politics) or not.

FEUDALISM TOWARDS CAPITALISM

Feudalism and Capitalism are two economic systems that occur in rapid succession.
Feudalism is an economic system that flourished in medieval Europe from the 8th to the 15th
centuries AD/CE. Feudalism is described as an economic system in which lords exercise power
over administrative and judicial responsibilities. The predominance of relationships between
lords and vassals, which were created by the lords' bestowal of property known as "fiefs" and
their receipt of homage from the vassals. These ties required vassals to provide services to their
lords, as well as the lords' need to protect and honor their vassals (Brown, 2021).

The structure of Feudalism was primarily hierarchical, with the nobility holding the crown
and leasing it to knights in exchange for military duty, and peasants working for the nobles in
exchange for shelter and safety. The king had complete power over the feudal system, owned
all of the land, and made all of the decisions. The barons, also known as nobles, were powerful
and affluent individuals who chartered the land from the king and rented it to the knights in
exchange for the monarch's military duty. The vassals, serfs, slaves, and peasantry made up
the lowest strata of society. These were the people who were under the protection of the barons
and gave them honor, allegiance, labor, and a portion of their output. With growing trade
options, the peasants grew self-sufficient, and the land and agriculture-based feudal system
eventually fell out of favor.

As a profit-driven system, capitalism is defined by private ownership of capital goods,

investments made under private decisions, and the manufacture, distribution, and allocation of
commodities based on market demands. In such an economy, the government's responsibility is
limited to monitoring rather than imposing coercion. The hierarchical structure consists of
workers at the bottom, middle-class workers who benefit from the advantages provided by the
middle-class workers, and capitalists at the top who dominate everyone else and get the
majority of the profit, resulting in capitalism's greatest drawback, inequality. In this system, the
working class may be the ones that put in the greatest effort, so those at the top benefit the
most. Despite the disparity in profit, capitalism was and continues to be viewed as helpful since
it rewards innovation, which obscures the harsh reality that the labor of those at the bottom
enriches those at the top. Even if it stimulates individuals to fight for better positions, it cannot
give enough space for everyone to reach the top of the pyramid, no matter how much upheaval
is poured into it.

THE REASON BEHIND THE FALL OF FEUDALISM

 Feudalism was a coercive system that granted few individual liberties which was later
replaced by capitalism. The putting-out system and the birth of capitalist industry, the decline of
the manorial system, and mercantilism were some of the factors that contributed to feudalism's
demise in the medieval era. During the medieval era, the putting out system developed a
mechanism for capitalists and laborers to get around the guild system. It became popular for
everyone because people could work from home, manufacture raw materials, and then
transport them to a central place to be assembled and sold.

The manorial system began to crumble as the putting-out system and capitalism became
increasingly prevalent. Many economic and political causes had a role in the manorial system's
demise. The emergence of a new centralized monarchy competed with the lord's local
governance; the spread of commerce and a money economy offered greater profit to capitalist
industry than to subsistence manors. The widespread expansion of cities and capitalistic trade
tended to break down the tiny local economic unit, the manor, and to create much bigger units,
resulting in gradual decline.

Mercantilism is the first stage of capitalism. It referred to the government's monopoly on

trade and commerce. For the purpose of guiding commercial activity, the state developed laws
and regulations. It also mirrored the expansion of towns in the 11th and 13th centuries, as well
as the emergence of "town burghers," a group of merchants who amassed a great deal of
money via trade. A capitalist class formed in rural regions, known as the "country knights," who
made their wealth in agriculture. The wealth of this newly rising capitalist elite piqued the
interest of kings, feudal lords, and outlaws alike (Raj, n.d.).

BONUS QUESTION: How did political economy as a school of thought emerged and how is the
study of political economy as a field of study relevant in your everyday life?

According to my understanding, Political Economy arose as a school of thought in

response to our need for the government to have a larger role in economic regulation. It
develops because, as I said in earlier readings, numerous philosophers refused to explain the
distribution of wealth and power in terms of God's will, instead relying on political and economic
and social causes, as well as their intricate relationships.

Political economy is important in my daily life since it is the foundation of everything.

School, earning money, and spending are usually the focus of people's lives. As a person, I
have obtained a thorough grasp of how government and economics are intertwined through
political economy. For example, because we are in the midst of a pandemic, the government is
intervening in our economy to assist both consumers and producers in keeping their businesses
afloat, as we are both having crises-consumers managing their income and producers selling
their wares.
 References

Boyle, M. J. (2021, February 25). Political Economy. Investopedia.

https://www.investopedia.com/terms/p/political-economy.asp

Brown, E. A.R. (2021, February 12). Feudalism. Encyclopedia Britannica.

https://www.britannica.com/topic/feudalism

Dili, R. M., & Cortez, E. R. (2020). Understanding Political Economy as a Discipline.

INTRODUCTION TO POLITICAL ECONOMY (p. 5).

Payumo, C. (2012). The Basics of Economics. In Understanding Economics (p. 6).

Raj, A. (n.d.). https://magadhmahilacollege.org/wp-content/uploads/2020/04/The-factors-

responsible-for-transition-from-feudalism-to-capitalism.pdf. The factors Responsible for

transition from Feudalism to Capitalism.

Veseth, M. A. (2020, May https://www.britannica.com/topic/political-economy). Political

Economy. Encyclopedia Britannica. Britannica