Political Economy

-FIRST YEAR LEVEL-law and political sciences-SECTION -B-

Lecture No. 01: Introduction to Political Economy

All countries, regardless of their degree of development, seek to ensure

the security and stability of their citizens as the best way to achieve their
growth in various areas of life, perhaps the most important of these is the
economic aspect, which occupies an important place in the lives of
individuals, as they can satisfy their various needs for food, drink, clothing,
housing, and medicine through the budget they have. Given the
importance of this field, it is not devoid of difficulties and problems, the
most important dimensions of which can be summarized in the challenge
represented by finding a balance between the different groups of society,
and the fair distribution of the wealth that the peoples abound.

One of the most important topics that political economy is interested in is:
"The economic problem". Indeed, we live in an era in which economic
problems, whether for the developing countries to which they belong or for
the developed countries, occupy the forefront of opinion's concerns. In
such circumstances, knowledge of these matters is considered a vital
necessity for all those interested in social studies, for all those whose work
qualifies them to make important decisions in social life, and even for the
ordinary citizen.

Importance of political economy

The importance of studying political economy, whose basic dimensions

can be limited to the following:

-Theoretical importance: Political economy includes multiple studies that

are complex in aspects, and its specialists try to extract a set of laws and
theories that are suitable for interpreting and predicting reality, and also
help to understand the basis of the functioning of the economic system in
its various aspects.
-Historical importance: It studies the history of theories and

economic thought on the one hand and the history of facts or what is
called economic history on the other hand. It is no secret that knowledge
is not a separate episode, nor does it take place in a vacuum, but rather
there is a continuous succession and constant communication. Therefore,
full knowledge of economic problems requires exposure to these historical
studies, which strengthens and supports understanding.

-Practical importance: Political economy is not limited to knowing

theoretical principles or trying to survey historical development, but rather

goes beyond that to working to adopt specific policies in relation to
specific problems and in order to achieve specific goals. These applied
studies depend on economic theories and require full knowledge of
realistic conditions, including historical development. Naturally, this
applied study requires the intensification of multiple sciences and various
research tools so that it is possible to control the economic reality,
anticipate the negative effects that result from some transactions and
some practices prevailing in society, and solve them effectively.

The emergence of political economy:

Political economy is a term whose origins go back to the Greeks, where it

was known by the following terms OIKOS-NOMOS-

POLITIKOS, which mean, respectively: house, law, social. This term was
used for the first time by Aristotle, who meant by using it the science of
the laws of home economics, or the laws of economics. Household
financial liability, which is concerned with the financial affairs of the house,
and therefore economics according to the Greeks means the set of laws or
rules that govern the financial affairs of the house.

The term political economy was used independently at the beginning of

the seventeenth century, specifically in France by Antoine de
Montchrestine, who used the term political economy for the first time. He
aimed to define the parameters of the policy that the State should follow
to increase its wealth, and he gave economics a political character in order
to create a new science, which is the art of obtaining the will of the State,
and thus the jurist removed the economy from the collective scope related
to the State, knowing that the politician is synonymous with the word
State, and thus the science of managing the financial affairs of the State
with the aim of increasing its wealth.

The term political economy also prevailed in some European countries,

such as France and Britain, and this was through economists such as
"William Betty" and "John Stewart Mill." However, with the development of
the capitalist system and the interest in the individual, they deleted the
word "political" to indicate that the study relates to the individual and not
the State, and thus the science of economics instead of political economics
spread in the Anglo-Saxon countries.

As for the socialist countries that registered State intervention in public

life, the close link between economics and politics remained, and the term
political economy became accepted in thought and practice. The best
evidence of this is the return of many contemporary economists to using
the term political economy, the most prominent of whom is the French
jurist Raymond Barr. Oscar Lange, and other jurists around the world.

As for the socialist countries that registered State intervention in public

life, the close link between economics and politics remained, and the term
political economy became accepted in thought and practice. The best
evidence of this is the return of many contemporary economists to using
the term political economy, the most prominent of whom is the French
jurist Raymond Barr. Oscar Lange, and other jurists around the world.

Definition of political economy:

There were many definitions attributed to political economy, and the

wording relied upon by this or that jurist differed, including the definition
presented by William Stanley Jefferson, who believes that it is: "a science
that investigates the wealth of peoples and the reasons that make another
nation rank in happiness and well-being. Its purpose is to provide guidance
on what should be done to reduce the number of the poor and needy as
much as possible and to provide each one with the means that will lead
him to reap the fruits of his labor." Others also define it as: "a science that
seeks to achieve the satisfaction of the needs of society or the State in a
way based on obtaining what is necessary for the members of society for
their needs, which are considered relatively rare, by using politics to
establish relationships based on mutual respect and lack of political,
monetary, or economic dependency, and achieving independence in
political and economic opinion".

Through the definitions referred to above, we can define political economy

in general as: "a science that is based on the totality of means taken to
manage the required economic issue, whether related to scarcity, wealth,
or unemployment. It is a science that guides the State and society to the
wisdom of economic matters, and to take appropriate measures to address
them at the appropriate time to satisfy general needs".

Relationship between political economy and law:

Thus, the relationship between political economy and the science of law
appears to us, as there exists in human societies in our time a set of legal
rules that regulate the relations of individuals with each other, and the law
is considered the framework that takes place within the economic activity
of society. The process of buying and selling a specific commodity has its
economic content, which is in the quantity dealt with, the type of
commodity, and its price at the same time, it has its own legal framework
related to the extent of its legitimacy, and regulating the rights of the
contracting parties.

The economy in Algeria is regulated according to a set of legal texts,

perhaps the most important of which are:

Commercial Law: It is a set of legal texts and materials that govern

and clarify the mechanism of commercial work in Algeria. Every individual

who intends to establish a commercial project as a profession and source
of income is considered a merchant, and is subject to the provisions of the
Commercial Law, which clarifies commercial transactions based on
honesty and trust in business, and which prevents any fraud or deception
while conducting business.

Competition law: The set of legal rules that control competition or

competition between economic operators (institutions) to maintain

customers (customers), or it is a set of rules applied to the market, which
includes searching for customers and maintaining them on the market
side.

Civil law: It is one of the most important branches of private law that
regulates the relationships that arise between people who do not act as
sovereign. Civil law is the law that regulates financial legal ties except for
those related to trade and the personal relationships of individuals with
each other.

Investment Law: Subject to the provisions of this law, investments made

through: the acquisition of tangible or intangible assets that fall

directly within the activities of producing goods and services within the
framework of establishing and expanding production capabilities and/or
rehabilitating production tools, contributing to the capital of an institution
in the form of cash shares or In-kind, transfer of activities from abroad.

Characteristics of political economy:

Based on the previous definitions, it is possible to extract the features

related to political economy, the most important of which are as follows:

1-Political economy is a science: It is a set of organized human

knowledge related to nature, society, and thought, extracted through the
discovery of the objective laws that govern sensory phenomena through
the use of scientific research methods, and it is knowledge that aims to
explain these phenomena in a scientific manner.

2-The subject of political economy revolves around knowledge related to

the totality of the phenomena that constitute human economic activity in
society:

This activity consists of producing and distributing products and services

necessary for the livelihood of community members. Production is
embodied on the ground in two types of relationships: On the one hand, it
is the relationship between man and nature, within which man tends to
make significant efforts to obtain what he needs from nature in its original
state or after transforming it in a way that preserves his existence. His role
in confronting nature is not negative. If it gives it to him, he lives, and if it
is stingy with him, he dies. Therefore, he works to control it and make it
more suitable for his life. On the other hand, production is embodied in a
person's relationship with other people. In fact, he cannot maintain his
existence except through the work of others. The members of society
complement each other, and therefore the production process is by nature
a social

process, and thus this is in Cooperation between them in order to satisfy

their needs, and each one in his field of specialization.

3-Political economy aims to address economic problems in a particular

society:

The most important areas of economic problems in all societies are mainly
related to scarcity of resources, unemployment, and unequal distribution
of wealth with regard to the scarcity of basic resources, it is the study of
the adaptation methods that humans must follow in order to equate their
unlimited needs with the means of achieving these specific and rare
needs. As for unemployment, it is defined as the forced or sometimes
voluntary unemployment or cessation of part of the labor force in a
society, despite the labor force's ability and desire to work and produce. As
for the unequal distribution of wealth, it is embodied in the lack of equality
between the different segments of society in the periodic revenues they
obtain, and the lack of uniformity in their ability to satisfy their daily
needs.

The basic branches of political economy:

Specialists in the study of political economics take into account two basic
elements, namely macroeconomics and microeconomics, and we separate
each one of them as follows:

A-Macroeconomics: It means the theoretical approach that studies

the economy through the existing relationships between major economic

components of countries, such as the impact of national income,
employment rates, price inflation, the total consumption rate, and the
investment agreement rate. It also studies the effects of both monetary
policy and the financial policy followed in the country.

B-Microeconomics: It is the section of science that investigates the

behavior of partial units or individual actions, including individuals and

companies, such as the study of supply and demand, the market, price,
and commodity.