Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government. Originating in the field of moral philosophy (
Adam Smith for example, held the Chair of Moral Philosophy at the University of Glasgow), it developed in the
18th century as the study of the economies of states (also known as polities, hence the word "political" in "political economy"). In contradistinction to the theory of the
Physiocrats, in which land was seen as the source of all wealth, some political economists proposed the
labour theory of value (first introduced by
John Locke, developed by
Adam Smith and later
Karl Marx), according to which labour is the real source of value. Many political economists also attracted attention to the accelerating development of
technology, whose role in economic and social relationships grew ever more important.
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A branch of the social sciences that takes as its principal subject of study the interrelationships between political and economic institutions and processes. That is, political economists are interested in analyzing and explaining the ways in which various sorts of government affect the allocation of scarce resources in society through their laws and policies as well as the ways in which the nature of the economic system and the behavior of people acting on their economic interests affects the form of government and the kinds of laws and policies that get made. [See also:
economics,
political science]
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