The Role of Political Economy in Educating the Future Political Elite

Abstract

"In view of the present state of the world, I think we can agree that humanity has not yet found ‘rest from its evils’. In this paper we will explore whether there is any particular wisdom to be found in Political Economy that can guide a future political elite in lessening the evils currently suffered by humanity. Political Economy, or Economics as it is now called, was not a distinct discipline at the time of Plato. It only became a special study in the second half of the18th century, first in France under the Économistes, or Physiocrats as they are more commonly called, and then in Britain with Adam Smith, often referred to as the ‘father of modern economics’. Economics emerged as a distinct subject in circumstances similar to the ones we are now facing, a mal-functioning of the economic order, which led thinking men and women to ask whether there might be a better way. Likewise the Great Depression of the 1930s led to the emergence of Keynesian economics which has come back into fashion as a way of dealing with the present crisis, with many attributing the current turmoil to market failure, but, as will be argued in this paper, it is really a failure of governance. What do I mean by this? Markets are a natural phenomenon which arise wherever humans meet to trade. They are in the nature of things and cannot be abolished. The ideologically inspired Soviet Union tried in vain to abolish markets. To ensure equal treatment for everyone, the state charged the same rent for all apartments of the same size. This was egalitarian, but ignored the element of location, another natural phenomenon. The owner of a favourably located flat could, and did, charge a higher, rent which reflected its market value. Thus, contrary to intention, market forces ensured that the best properties ended up in the hands of the wealthiest. Markets operate within the constraints set by government."(pg 1)