Political economy is an interdisciplinary branch of the social sciences that focuses on the interrelationships among individuals, governments, and public policy.
- The field of political economy is the study of how economic theories such as capitalism or communism play out in the real world.
- Those who study political economy seek to understand how history, culture, and customs impact an economic system.
- Global political economy studies how political forces shape global economic interactions.
Political economists study how economic theories such as capitalism, socialism, and communism work in the real world. At its root, any economic theory is a methodology that is adopted as a means of directing the distribution of a finite amount of resources in a way that is beneficial for the greatest number of individuals.
In a wider sense, political economy was once the common term used for the field we now call economics. Adam Smith, John Stuart Mill, and Jean-Jacques Rousseau all used the term to describe their theories. The briefer term economy was substituted in the early 20th century with the development of more rigorous statistical methods for analyzing economic factors.