Political economy is one of the branches of sociology. It creates an interrelationship between the people, government and public policies of a country. Economic theories such as capitalism, socialism or communism influence social life. Political economists study how these economic theories affect society. Economic theory allows a limited amount of resources to be distributed among the greatest number of people. This results in fewer resources benefiting more people. In the international world public policies are created and formulated by this economic theory. Political economists study the main goals and outcomes of these policies. Over the past 50 years, political economy has gained global scope. In this case, this issue is playing an important role in political science and economics in three ways:
It analyzes how political forces affect the economy
It assesses how the economy affects politics
It uses the tools of economics to study politics
All the above three approaches have deeply influenced economists. Through political economy, experts seek to change the economy of a society.
Political economy is generally of three types:
1. Socialism
2. Communism
3. Capitalism
These are described below:
Socialism:- This type of political economy promotes the idea that the production and distribution of goods and wealth are maintained and regulated by society, rather than a particular group of people. The rationale behind this is that whatever is produced by society is done so because of those who participate, regardless of status, wealth, or position. Socialism aims to bridge the gap between rich and poor, eliminating the ability of individuals or groups to control the majority of power and wealth. [¹]
Communism:- Individuals often confuse communism with socialism, but there is a distinct difference between these two theories. Communism was a theory developed by Karl Marx, who felt that capitalism was limited and created a big divide between rich and poor. He believed in shared resources, including property. Unlike socialism, however, under communism production and distribution are overseen by the government. [²]
Capitalism:- This theory advocates profit as a motive for advancement and the ability of free markets to regulate and drive the economy on their own. The idea behind capitalism is that private individuals and other actors are driven by their own interests. They control production and distribution, set prices, and create supply and demand. [³]
Those who study and research political economy are called political economists. They usually research how a political, economic and social system affects a country's economy. They also analyze how public policies, political situations and political institutions may be affected by it in the future.
Political economy studies both how the economy affects politics and how politics affects the economy. As political parties come to and leave power, economic policy often changes in a country based on the ideology and goals of the party in power. [⁴]
Political changes can impact many areas of the economy, which can in turn impact elections and government policies. These include:
- Monetary and fiscal policy
- Food security
- Global trade
- Labor supply, demand, and crises
- Gross domestic product (GDP)
- Financial inequality
- Disaster management
- Environmental stability [⁵]
As the economies of more countries become interconnected through globalism and international trade, the politics of one country can have a strong impact on the economy of another. Understanding the relationship between political power and economic decisions in one country can help other countries predict how their own economies will be impacted.
Understanding the political economy can also help a country's economy become more resilient. If the government leaders in power at any given moment are forward-thinking, they can put laws and policies in place that create the greatest possibility for economic stability and growth, regardless of changing political power.
Political economy is an important determinant of social change. It analyzes the relationship between individuals, government and public policies of a country. Political economists study how it affects a country's politics and economy. A country's economy depends on the decisions of that country's government or major political parties. So with the change of government of a country, the economic policies of that country also change. That is, the economy of a country depends on the ideals and goals of the ruling political party in that country. By doing so, the policies affect the country's fiscal policies, labor crisis, and food security. Even the Gross Domestic Product (GDP) and Consumer Price Index (CPI) of a country are affected. If these factors change, there is a positive or negative effect on the country's economy. As a result, new political laws or policies are formulated. If the economic system of the developing countries is affected, it also affects the political economy of the subordinate states.
In the United States, GDP or CPI changes due to political economy. Its massive impact can be seen in the cryptocurrency market. Especially good CPI data creates a kind of volatility in the crypto market, as a result of which the price of crypto coins continues to pump. Again, bad CPI data is creating a kind of crash in the crypto market which dumps the price of the coins. Thus the political economy manipulates the psychology of crypto investors and traders.
Ultimately we learn that our real life is inextricably linked to political economy. Our personal finances and sources of income are managed accordingly. So as conscious citizens of the country we must get an idea about it. We can get regular updates on the political economy from daily newspapers or social media. Moreover, we can gain knowledge about it from the mastery of an economist.
Article References:
[1](Shleifer, Andrei, and Robert W. Vishny. "The Politics of Market Socialism," Journal of Economic Perspectives, vol. 8, no. 2, 1994, pp. 165-176.)
[2](The University of North Carolina at Chapel Hill. "Communism: Karl Marx to Joseph Stalin, https://europe.unc.edu/iron-curtain/history/communism-karl-marx-to-joseph-stalin/)
[3](International Monetary Fund. "What Is Capitalism?, https://www.imf.org/external/pubs/ft/fandd/2015/06/basics.htm)
[4](International Monetary Fund. "The Political Economy of Economic Policy, https://www.imf.org/en/Publications/fandd/issues/2020/06/political-economy-of-economic-policy-jeff-frieden)
[5](Harvard University. "Political Economy, https://undergrad.gov.harvard.edu/political-economy)
So with that I conclude my article. I hope you can get to know about Political Economy in every sector and the importance of it from this post. If you want to know more about Politics, economics or something related then definitely let me know in the comment box. I will try to answer your questions. I linked some keywords to Leo Glossary. You can click them out to know the definition to concepts of the keyword. It's nice to use them in my article.
At the end of the post I want to tell you about a great campaign that is now running on Leo Finance. This is an Adoption Campaign by 
Visit my Leo Finance profile to read my various kinds of articles. Also there are some of my makeup vlogs, you can watch them through 3Speak if you want. If you want me to write on any topic then let me know. I will try to gain knowledge about it and give you some good ideas through my articles. Join 
- Join Leo Finance Discord Server
- Join The Terminal Discord Server
- Leo Finance Adoption Campaign Announcement
- Join The Adoption Campaign on Zealy
- Visit my Leo Finance Profile
Thumbnail and footer created with Canva. Page divider made by 
