4_PolEcon - Political Economy PS106 Introduction to...

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1 Political Economy PS106, Introduction to Comparative Politics University of Wisconsin, Madison Prof. Yoshiko M. Herrera February 4, 2008
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2 Political Economy Lecture Outline, February 4, 2008 1. What is political economy? How to distribute resources: markets, states, and social networks Origins of political-economic systems 2. Types of Political-economic systems Capitalism Communism Mixed Economies Social Democracy, Mercantilism 3. How states intervene in markets Trade policy Fiscal Policy: Taxes and Spending Regulation Monetary policy Examples: What to do about recession Neo-liberal Economic Reform 4. Conclusions
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3 1. Political Economy What is political economy? The study of how economics and politics are related Considers how government policies affect markets and visa versa Depending on how governments regulate economic activity, different countries will have different political-economic systems
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4 How to Distribute Resources: Markets, States, and Social Networks Markets: Using the resources they own, individuals or firms "cast votes" for additional allocation (i.e. decide to buy or sell) Resources are always distributed unequally States /governments: Decide resource allocation according to their own priorities Often differs from market outcomes Social networks , including families or ethnic clans: Decide resource allocation according to their own priorities Often are informal, outside the state or market Can be large or small-scale, but usually small
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5 Actors and Economic Policymaking Relevant actors that may be involved in policymaking State, Business, Labor Actors’ interaction during policymaking Conflictual Economic policy reflects preferences of strongest actor Cooperative Economic policy is a compromise, interests of all actors are taken into account
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Origins of Political-Economic Systems Efficiency Most efficient design wins Economy produces political-economic system Economic Interests Classes and interest groups compete to get a systems that serves their interests Hence, the economy produces and reflects structures of political and economic power Culture/ Ideology Shared values and beliefs in a society shape the type of political-economic system
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This note was uploaded on 04/09/2008 for the course POLI SCI 106 taught by Professor Hererra during the Spring '08 term at University of Wisconsin.

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4_PolEcon - Political Economy PS106 Introduction to...

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