Political Economy

Political EconomyThis paper develops Latin American and North American topics with a focus on the relationship between economic liberalism and political economy. The paper provides an overview of recent studies, analyzes the meaning of political economy in politics, considers its relevance to Latin American politics, examines how this perspective can be applied to academic Latin American history, and suggests some methodological concerns with regard to the use of political economy as a methodological resource for economic history.Some scholars distinguish between 'neo-liberalism'neo-conservatism' in relation to economics and politics in political economy (PE) studies. According to this view, there is no clear dividing line between conservative and liberal theories of political economy; rather both tendencies are simply different forms of capitalism. In fact, even the label 'neo-liberal' may be misleading, since even well-known free market ideologues argue that they are not free-marke t fundamentalists, although they have a minimal tolerance for markets.Liberal-leaning theorists of political economy, such as Milton Friedman, would argue that politics can easily be harnessed by a classical liberal program of free markets. However, while the two ideologies may initially appear to be largely equivalent, the consequences of their policies can be quite different.Contemporary political economy has much less interest in the nature of democracy, and the degree to which economic liberalism (as distinguished from political liberalism) tends to coincide with the emergence of 'good democracies'. While conservative theorists of political economy would argue that there is no such thing as a 'free' society, those who seek to promote political equality and human rights, while promoting capitalism, would argue that freedom is not only compatible with market capitalism, but actually required by markets.Since Latin American and North American political economies are relatively new, there is very little literature on the nature of political capitalism, or the degree to which political liberalization can enhance economic growth. Some writers, such as Mancur Olson, argue that market fundamentalism is often in tension with liberal democracy, and that this tension can lead to political instability, and ultimately to war.Liberal political economic philosophies also vary in their theories about the role of the state, how to best protect the environment, and what types of public policy they favor. Such theories can also vary in their theories about the relation between the economy and politics, the relative significance of the private and public sectors, and the impact of globalization on political economies.Political economy is also not solely a theoretical discipline. It has become increasingly important in many areas of Latin American and North American public policy. Many scholars have used economic theory to support social, political, and environmental initiativ es in Latin America and North America.The implications of the study of political economy for Latin American and North American political and social history are a subject of considerable debate. But economic and political theories do not themselves, by themselves, provide a basis for the analysis of contemporary political and economic issues. In many cases, it is the outcomes of economic policies that may have the most profound impact on politics and society, so that the growth of the nation-state in Latin America and North America must be understood in the context of long-term political and economic changes.