Introduction
Economics broadly concerns the process of accumulation, allocation, and exchange of the limited resources in the domestic and international markets. On the other hand, politics focuses on manipulation of power in human disagreements and agreements in the context of civil governance and public welfare.
Political Economy is broadly referred to as the interconnections between economics, politics, and law with the objective of outlining the relations and government policies within a nation and between different nations. Political economy is important for the governments, institutions, and individuals to understand the trends in the competitive and ever changing global economy.
Political economy is an important aspect that analyses the relationship between individuals and the public with general emphasize on government and market relationship with respect to politics, economics, and the public welfare. Political economy applies a system of governance where productions in a capitalized country are managed in consideration of political and economic aspects.
Evolutions in the global economy have led to the emergence of international political economy characterized by institutions such as world trade organization and the World Bank. The emergence of international world economy came by with issues of concern such as global warming, brain drain and security of energy.
The Upsurge of Economics and Politics
Economics and politics in the society are aspects of human existence and living in accordance with the prevailing laws that governs human activities such as banking, agricultural activities, selling, and buying of merchandise.
The prevailing political laws seeks to control wages, prices of commodities and service and create capital in a way that may be or may not acceptable by human beings. Political laws and regulations are made and manipulated by man but economic laws about economic operations are self-perpetuating like the natural laws, which exist on a self-operating basis.
Economics
An Individual in the society encounters every day challenges of making choices with money and property to be able to fulfill his own wants and needs with the limited resources. The basic needs that humans being seek to satisfy every single day entails processes of making economic decisions with specific demands such as spending on electricity bills, food, entertainment, clothing and shelter through regular payment of rent. In economics, areas of focus are consumer decisions in relation to their preference and price variations of commodities.
Concerns and emphasize of economics are the choices made by individual consumers and nations concerning existing products and resources. The choices made are attributed to consumer behavior and character reaction in relation to economic and political constraints that exist in the local and international environment with prevalence of economic factors of trade. Coe (2010:83) argues that economics is a complex highly interconnected phenomenon that is self organizing and adaptive to the changes in markets.
Economics seeks to unravel the mystery of wealth creation in the natural and man made environment where their allocation and management brings about wealthy nation, individuals while other nations, and individuals languish in poverty.
Economics bases its evaluations on the assumptions that all humans have the sole aim of fulfilling their personal interests and desires through rational behavior that are directed towards satisfaction of unlimited wants and needs of human beings. The general understanding of the human behavior and activities in fulfilling self-interests in the politically influential environment depicts the complexity of economics in an environment with scarce resources.
Scarcity of Resources
The complexity of economics arises as a result of the unlimited wants and needs of human beings that are sought to be satisfied by the limited resources in existence. The limited resources basically entail those of individuals and a nation, which can be utilized to for the purpose of accumulating individual and state wealth.
With respect to states, they accumulate wealth through utilization of natural sources, human workforce, and technology while individuals accumulate wealth through utilization of time, money, and skills.
The success and ability for individuals and nations to accumulate wealth is closely dependent on the decisions and choices made by individuals and nations with respect to the limited resources.
The insatiable human needs and wants are what make economics a critical field in human existence as human beings has to make decisions on which goods and services to fore go and which ones to purchase. Individuals and states need to make choices on how to allocate the limited resources effectively and efficiently for maximum utility and satisfaction. Economics critically observes the issues involved in these allocations and decision in the two categories of macro and microeconomics.
Macroeconomics
Macro and microeconomics are the two broad categories that are used to critically observe economic behaviors of individuals and nations respectively. Macroeconomics analyses the total output of a state and the means by which it distributes the limited resources of the workforce, capital, and land with aim of facilitating economic growth and international trade by maximizing production.
In the long run, Macro economic conditions are proved to affect many people across wide variety of occupations. In the short run, macroeconomic condition may only affect a few individuals in limited occupations (Oyer 2006). However, the economy is proved to be controlled and driven by uncontrollable factors such as market forces that keep changing.
Microeconomics
On the other hand, microeconomics analyses behavior in the same context as macroeconomics but with respect to individuals and companies within a particular state. Analysis of microeconomics is more scientific compared to macroeconomic as it analyses particular aspects of the whole economy.
Microeconomics deals with specific individuals and businesses and the understanding of their reactions to price variations. Macroeconomics and microeconomics go a long way in helping economies and individuals to make right choices when managing the scarce resources that are in existence and available at a particular time. The systems through economies allocate the scarce resources at a particular time depend on the type of economy.
Governments and individuals must make the most appropriate choices and decisions in allocating resources for maximum efficiency and utilization due to the nature of insatiable needs and limited resources. Economies can either be command or market economies depending on the nature of governance with respect to the economy.
Market economies are those where allocation of resources are freely determined by the interactions of demand and supply forces in the competitive markets. On the other hand, command economies depend on government decision on how resources are to be allocated. Politics come in where the government has the responsibility of making decisions with regards to effective allocation of the limited resources.
Politics
The government plays a major role in controlling and making decision with regards to allocation of the scarce resources. However, politics has become a major issue of concern as it has been reported to be the biggest contributor to the slow pace of economic growth in many economies.
Communist economies are worse off as politics tend to take the lead in manipulating the process of allocation of resources. In this case, misallocation and misappropriation of the limited economic resources is rampant as politicians seek to satisfy their own selfish interests. Although politics plays a major role in economics, it can be referred to being pathetic issue of concern in many resulting failed states
Communist economies face major challenges due to political control of economic activities of firms and government owned companies through harsh imposition of tax burdens and unfavorable regulations. Politics of these kinds have affected communist economies negatively and thus the need for many countries to depoliticize their economies (Simon, et al, 1977).
Political Economy
The welfare of human beings as far as the limited resources can be utilized to the maximum by the government is the main aspect of concern for the political economy. The unlimited and insatiable needs of human beings are satisfied by the individual wealth, which he accumulates, and the wealth of the nation and its ability to take care of its citizens. Political economy is what is needed for both the government and the individuals to direct workforce and procure all the available resources for maximum satisfaction.
Political economy is the means through which human beings achieve maximum satisfaction of their needs and wants using the limited resources available. Wealth accumulation is objective of political economy where the individual’s wellbeing and the nation at large can be comfortable and maintain the highest achievable living standards. The government is set up for all the citizens’ wellbeing with benefits of liberty, basic needs, and education in line with states economic growth and stability.
The accumulation of state property and wealth has the sole purpose of ensuring all citizens benefit and equally participate in building the economy and enjoying and equally sharing the so-called national cake. The government ensures it sets its population under control and at the same time ensures that the existing wealth and resources is enough to sustain the existing population with respect to social amenities such as health centers and schools.
The wealth of a nation is not the only indication of the general wellbeing of a nation, but basically applies to whether there equal distribution of wealth among the regions, all classes, and minority and majority groups fairly. The population’s wellbeing is what indicates the government has succeeded in managing the state resources in line with the population to prosperity.
The population gets honest rewards with respect to the workforce although in some nations such as China has minority groups reaping bigger benefits than the entire population regardless of their contribution to the nation. Skilled and unskilled workforce should get rewards equal to specific contribution.
The achievement of political economy to organize the nation for the improvement of lives of the poor as well as the rich is exemplary. Political economy pushes for the development of good and skilled governance to champion economic activities towards eradication of poverty and the general wellbeing of a nation. The happiness of all classes of citizens entails proportional reward of the labor force according to their contribution. The government seeks to reward its workforce and motivate its citizens to work harder and enjoy what life brings.
Political economy seeks to explain and understand the nature of wealth accumulation and the reasons why some nations become wealthy some languish in poverty and underdevelopment. The modern economy has become more complex and hard to manage and control for development with respect to utilization of resources and accumulation of property.
Drehle (2010) argue that the government may fail to control allocation of resources in an effective manner and may adopt modern policies through injection of funds into the economy other than allocating resources effectively from production. Through central banks, governments may undertake to use monetary policies to spearhead the nation towards economic growth.
Human beings were brought together by common interests in satisfying the needs of the public. Public interests satisfaction through utilization of wealth was assigned to the government as its responsibility to the public.
The government levied its citizens to generate revenue for its operations and development plans. On the other hand, individual wealth was accumulation and resource utilization is a more complex phenomenon. Government participation in providing favorable conditions and protection of private property was essential for development of the national economy.
Government officials were reported in many states to use political power to accumulate private property using the resources the nation. The complexity of private property and public wealth transparency has been solved through introduction of property rights and laws for the wellbeing if the nation. Legislations were put in place to ensure the economy is controlled and development in a proper manner.
The Workforce
The potential of the population can be estimated through demand and supply of both skilled and unskilled labor for wealth creation. The workforce demanded by is availed according to rewards and working conditions that the economy is offering. The population of a nation offers workforce that is valued and even export it to other economies that have a shortage of skilled and unskilled workforce to utilize resources and capital that exists in a country.
The same way an economy may import workforce form a state that has excess supply and insufficient rewards to sustain motivation and the skilled services being offered by the economy. The political economy seeks to strike a balance between demand of the workforce, supply, and proportional reward. This is relation to aspect of a suffering and hungry population which does not have the means of meeting their needs and wants.
National wealth is the determinant of the ability if a nation to manage its wealth to support and maintain consumption of its population. The production of the workforce is facilitated by the political economy where the wellbeing of citizens is the main objective. Political economy links all factors of production with consideration of natural order of production and consumption.
Naturally, labor depends on production for existence and reproduction while production depends on labor for development and wealth creation. The government has the responsibility of managing this order in a manner that wealth is created and wellbeing of the citizens is sustained and improved.
Conclusion
Economics and politics can be said to have developed as human beings respond to the nature of political interventions in their economic activities in accordance and manipulation of the law to earn a living and improve standards pf living.
The propensity of human beings to respond to political interventions in their economic ventures can be referred as conditioned reflex actions with regards to challenges of nature, political regulations, and laws. Human beings have accepted economics and politics as part of their livelihood although they fail to realize to that these aspects of the economy and politics may become a barrier to improved living standards if not well managed.
References
Coe, N. M., (2011). Geographies of production I: An evolutionary revolution. Progress in Human Geography, Vol. 35 Issue 1, p81-91, 11p. Web.
Drehle, V. D., (2011). The Man Who Said No to Easy Money. Time, Vol. 177 Issue 6, p42-45, 4p. Web.
Oyer, P., (2006). The macro foundation of microeconomics: Initial Labor market conditions and long-term outcomes for economists. Journal of Economic Perspectives, vol. 20, No. 3, 143-160. Web.
Simon, J. H., et al. (1997). Politics and Entrepreneurship in Transition Economies. Web.