political economy

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Source: Wikipedia contributors, ""Political economy,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Political_economy&oldid=189266719 (accessed February 8, 2008).

Political economy most commonly refers to interdisciplinary studies drawing upon economics, law, and political science in explaining how political institutions, the political environment, and the economic system - capitalist, socialist, mixed - influence each other.

Political economy originally was the term for studying production, buying and selling, and their relations with law, custom, and government. Political economy originated in moral philosophy (e.g. Adam Smith was Chairman of Moral Philosophy at the University of Glasgow), it developed in the 18th century as the study of the economies of states - polities, hence political economy.

In contradiction to the theory of the Physiocrats, wherein land was the source of all wealth, some political economists proposed the labour theory of value (introduced by John Locke, developed by Adam Smith, and later by Karl Marx), according to which labour is the true source of value. Many political economists also noted the accelerating development of technology, whose role in economic and social relations was important (Joseph Schumpeter).

In late nineteenth century, the term ""political economy"" was generally replaced by the term economics, used by those seeking to place the study of economy upon mathematical and axiomatic bases, rather than the structural relationships of production and consumption (cf. marginalism, Alfred Marshall).