Modern Political Economy

The economy is the realized social system of production,

exchange, distribution, and consumption of goods and
services of a country or other area. Today the range of
fields of study exploring, registering and describing the
economy or part of it. Practical fields directly related to
the human activities involving production, distribution,
exchange, and consumption of goods and services as a
whole. 

KAREN BELEN FELICES-PEREZ, LPT, MPA

Modern Political Economy
Modern economies generally produce a large (by
historical standards) economic surplus. This surplus is
composed of a vast number of goods in addition to those
associated with the basic physiological needs of food,
shelter, etc.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Modern Capitalist Conception Of Money

Money is only a means of exchange. In a society that

uses money care should be taken, if at all possible
(unfortunately very often it is NOT possible), to ensure
that the total of the spending of money per year is always
less than the total income per year of the individual, or
community, concerned.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Social Liberalism

The economy of a country is closely connected to the

well-being, or otherwise, of the people living there, and
politics can influence considerably the economy of that
country. In general the income of individuals is related to
their education, and the jobs available at the time may
require a particular set of skills. Poverty results from
inability of individuals to have income larger than the
actual expenditures.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Development

The area of development is a diverse field with many political

orientations, Marxist, Neoliberal and Postmodernist being among
them. It covers the reasons behind the historical growth of Less
Developed Countries (LDC), sometimes called the Third World.
Political economy of development embraces an interdisciplinary
approach that includes many social sciences. Much of the
research into this area is focused on the growth of what are now
developed countries, like Taiwan, Korea and Japan. The debate
is how these countries became rich, what political and economic
factors caused these places to change so much.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Patron Client Model of Development

Essentially the state is given as a patron, and it has

many clients who are capitalists. These capitalists bribe
the state and in exchange get subsidies and other
benefits forming a patron-client relationship. Other clients
in the nation-state are the middle class, who engage in
political activism to obtain benefits.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Capitalism and Political Economy

We can "never run out of anything," because if we start to run

out the price goes up, and then three things happen: (a)
consumers buy less;
(b) producers make more; and
(c) entrepreneurs invent substitutes.

Still, people object to these important functions of prices. 

KAREN BELEN FELICES-PEREZ, LPT, MPA

Modernization Theory

aimed to provide a specifically non-

communist solution to poverty in the developing
world – Its aim was to spread a specifically
industrialized, capitalist model of development
through the promotion of Western, democratic
values. 

KAREN BELEN FELICES-PEREZ, LPT, MPA

Modernization Theory

There are two main aspects of modernization

theory :
(1) its explanation of why poor countries are
underdeveloped, and
(2) its proposed solution to underdevelopment.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Modernization Theory

Modernization theory favored a capitalist- industrial

model of development – they believed that capitalism
(the free market) encouraged efficient production through
industrialization, the process of moving towards factory
based production.

KAREN BELEN FELICES-PEREZ, LPT, MPA

Modernization Theory

• Industrial –refers to production taking place in factories rather

than in the home or small workshops. This is large scale
production. (Think car plants and conveyer belts).
• Capitalism – a system where private money is invested in
industry in order to make a profit and goods are produced are for
sale in the market place rather than for private consumption.

KAREN BELEN FELICES-PEREZ, LPT, MPA

What Prevents Development?
(Talcott Parsons, 1964)
Particularism – Where people are allocated into roles
based on their affective or familial relationship to those
already in positions power. For example, where a
politician or head of a company gives their brother or
someone from their village or ethnic group a job simply
because they are close to them, rather than employing
someone based on their individual talent.

KAREN BELEN FELICES-PEREZ, LPT, MPA

What Prevents Development?
Collectivism – This is where the individual is expected to
put the group (the family or the village) before self-
interest – this might mean that children are expected to
leave school at a younger age in order to care for elderly
parents or grandparents rather than staying in school and
furthering their education.

KAREN BELEN FELICES-PEREZ, LPT, MPA

What Prevents Development?
Patriarchy – Patriarchal structures are much more
entrenched in less developed countries, and so women are
much less likely to gain positions of political or economic
power, and remain in traditional, housewife roles. This
means that half of the population is blocked from
contributing to the political and economic development
of the country.

KAREN BELEN FELICES-PEREZ, LPT, MPA

What Prevents Development?
Ascribed Status and Fatalism – Ascribed status is
where your position in society is ascribed (or determined)
at birth based on your caste, ethnic group or gender.
Examples include the cast system in India, many slave
systems, and this is also an aspect of extreme patriarchal
societies. This can result in Fatalism – the feeling that
there is nothing you can do to change your situation.

KAREN BELEN FELICES-PEREZ, LPT, MPA

In contrast, Parsons believed that Western cultural
values which promoted competition and economic
growth: such values included the following:

Individualism – The opposite of collectivism This is where

individuals put themselves first rather than the family or the
village/ clan. This frees individuals up to leave families/ villages
and use their talents to better themselves ( get an education/ set up
businesses)

KAREN BELEN FELICES-PEREZ, LPT, MPA

In contrast, Parsons believed that Western cultural
values which promoted competition and economic
growth: such values included the following:

Universalism – This involves applying the same standards to

everyone, and judging everyone according to the same standards
This is the opposite of particularism, where people are judged
differently based on their relationship to the person doing the
judging.

KAREN BELEN FELICES-PEREZ, LPT, MPA

In contrast, Parsons believed that Western cultural
values which promoted competition and economic
growth: such values included the following:
Achieved Status and Meritocracy – Achieved status is where you
achieve your success based on your own individual efforts. This is
profoundly related to the ideal of meritocracy. If we live in a truly
meritocratic society, then this means then the most talented and
hardworking should rise to the top-jobs, and these should be the
best people to ‘run the country’ and drive economic and social
development.

KAREN BELEN FELICES-PEREZ, LPT, MPA