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This article provides a survey of the origin of the term ‘political economy’ and its changes in meaning, emphasizing in particular its first modern usage in the 18th century, its demise from the end of the 19th century, when it was gradually replaced by the word ‘economics’, and its revival in a variety of forms, largely during the 1960s, which have altered its meaning from more traditional usage. What follows is therefore largely definitional and etymological, designed to indicate the lack of precise meaning associated with both the term, ‘political economy’ and its more modern synonym, ‘economics’.

The origin of words starting with ‘econom’ is Greek, from eco meaning ‘house’ and nom meaning ‘law’ in the sense appropriate to astronomy when it deals with ‘the law and order of the stars’ (Cannan 1929, p. 37). The traditional meaning of oikonomike or economics, was therefore ‘household management’. Aristotle (1962, p. 30) used it in this sense when analysing households as ‘three pairs: master and slave, husband and wife, father and children’. This meaning persisted in moral philosophy until the middle of the 18th century, for example, in Hutcheson (1755) and Smith (1763, p. 141). The Latin oeconomia likewise meant management of household affairs, extended to management in general including orderly arrangement of speech and composition. The French oeconomie or économie took over this wider meaning of management from the Latin and when combined with politique it signified public administration or management of the affairs of state. Arthur Young (1770) applied this wider meaning in the title of a treatise on agricultural management. Using ‘economy’ as a synonym for ‘thrift’, ‘frugality’ and careful management of the finances of households and other organizations also derives from the Latin adaptation. 17th-century concern with nation building gave the term) ‘public administration’ a wider scope, and given developments in France under Henry IV and Richelieu it is not surprising that the term ‘political economy’ made its first appearance there. This first use is generally attributed to Montch’retien (1615), but King (1948) indicates prior use in Mayerne-Turquet (1611). Because the relationship between state and economy it signified was so appropriate to the times, King suggests that other, perhaps earlier, uses may be found. Petty (1691, p. 181; cf. 1683, p. 483) used the term in England. As Cannan (1929, p. 39) surmised, he could as well have used ‘political economy’ as ‘political anatomy’ to describe his analysis of the Irish economy, considering he used ‘political arithmetick’ for the art of making more precise statements on the political economy of nations, interpreted as their comparative strengths (cf. Verri 1763, pp. 9–10, who speaks of the science of political economy in this manner). Cantillon (1755, p. 46) referred to an ‘oeconomy’ in the sense of an economic organism in which classes exist as interdependent units, but his book remained an ‘Essay on Commerce’.

More precise formulations of political economy as a science of economic organization, though with continuing connotations of management, regulation and even orderly natural laws, are found in Physiocracy. Quesnay’s early usage generally implies the traditional meanings, but in addition he applied the term to include discussions of the nature of wealth, its reproduction and distribution. This double meaning is particularly evident in his Tableau économique. It is therefore no accident that Mirabeau (1760) spoke of économie politique ‘as if it consisted of a dissertation on agriculture and public administration as well as on the nature of wealth and the means of procuring it’ (Cannan 1929, p. 40). During the subsequent decades the second meaning became more dominant, the word ‘science’ was added to it (an innovation attributed to Verri 1763, p. 9) and by the 1770s it almost exclusively referred to the production and distribution of wealth in the context of management of the nation’s resources.

Sir James Steuart (1767) is the first English economist to put ‘political economy’ into the title of a book. Its introductory chapter explained that just as ‘Oeconomy in general, is the art of providing for all the wants of the family’, so the science of political economy seeks ‘to secure a certain fund of subsistence for all the inhabitants, to obviate every circumstance which may render it precarious; to provide every thing necessary for supplying the wants of the society, and to employ the inhabitants … in such a manner as naturally to create reciprocal relations and dependencies between them, so as to make their several interests lead them to supply one another with reciprocal wants’ (1767, pp. 15, 17). Steuart’s full title gave the subject matter to be covered: ‘population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit and taxes’. In 1771 Verri published Reflections on Political Economy, the preface of which referred to a new department of knowledge called political economy. Although Smith did not use ‘political economy’ in his title the introduction and plan of his book refers to ‘different theories of political economy’ and at the start of Book IV he defined the term as ‘a branch of the science of a statesman or legislator’ with the twofold objectives of providing ‘a plentiful revenue or subsistence for the people … [and] to supply the state or commonwealth with a revenue sufficient for the publick services’ (Smith 1776, pp. 11, 428). Elsewhere (1776, pp. 678–9) Smith indicated that he saw political economy as an inquiry into the nature and causes of the wealth of nations or, as the Physiocrats had initially suggested, the science of the nature, reproduction, distribution and disposal of wealth.

The association of the science, political economy, with material welfare proved to be particularly hardy, as was its association with the art of legislation. Bentham (1793–5, p. 223) put the matter concisely when he argued, ‘Political Economy may be considered as a science or as an Art. But in this instance as in others, it is only as a guide to the art that the science is of use’. Torrens (1819, p. 453) also called it ‘one of the most important and useful branches of science’ while James Mill (1820, p. 211) and McCulloch (1825, p. 9) defined it as a systematic inquiry into the laws regulating the production, distribution, consumption and exchange of commodities or the products of labour. ‘Confounding’ the art with the science was criticized by Senior (1836, p. 3) as being detrimental to its development, a position likewise taken by John Stuart Mill (1831–3) and which also reaffirmed its moral and social nature. In this influential essay, Mill (1831–3, p. 140) defined political economy as ‘the science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth, in so far as those phenomena are not modified by the pursuit of any other object’. This position was more or less adhered to in his later Principles (1848, p. 21), when he defined its subject matter as ‘the laws of Production and Distribution, and some of the practical consequences deducible from them … ’. Cairnes (1875, p. 35) condensed this to the statement that ‘Political Economy … expounds the laws of the phenomena of wealth.’

The middle of the 19th century saw two criticisms of this meaning of political economy. Marx (1859, p. 20) identified the study of political economy with a search for ‘the anatomy of civil society’ or, as Engels (1859, p. 218) put in his review of this book, ‘the theoretical analysis of modern bourgeois society’. This preserved the name but criticized the scope and method of political economy. Others suggested the name be changed because it had become misleading. Hearn (1863) put forward Plutology or the theory of efforts to satisfy human wants; MacLeod (1875) proposed ‘economics’, defining it as the ‘science which treats of the laws which govern the relations of exchangeable quantities’, a nomenclature of whose virtues he successfully persuaded Jevons (Black 1977, p. 115). When in 1879 the Marshalls published an elementary political economy text, they called it The Economics of Industry. The new name of MacLeod and the Marshalls was favourably referred to in the second edition of Jevons’s Theory (1879, p. xiv) because of convenience and scientific nicety (it matched mathematics, ethics and aesthetics) and Jevons’s last published book (Jevons 1905) bore the title Principles of Economics. Although Cannan (1929, p. 44) claimed Marshall (1890) induced acceptance of the new name, this only came with the later editions, and the change was not completed until the early 1920s (Groenewegen 1985). Even then, Marshall (1890, p. 1) appeared to treat the two names as synonyms: ‘Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of well-being.’

Just as J.S. Mill (1831–3, pp. 120–1) had attempted retrospective codification of scope and method in the 1820s, so Robbins (1932, p. 16) redefined economics in its marginalist form as ‘the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses’. This did more than supply a meaning for the new term, ‘economics’. It destroyed the view classical economists had of their science, as Myint (1948) clearly pointed out. Others (for example, Knight 1951, p. 6) complained that Robbins’s definition neglected the link between economics and the ‘individualistic or “liberal” outlook on life, of which “capitalism”, or the competitive system, or free business enterprise, is the expression upon the economic side, as democracy on the political’. However, the major drawback of the Robbins definition was its irreconcilability with Keynes’s work with its proof of the possibility of unemployment equilibrium and hence contradicting Robbins’s requirement for the existence of an economic problem that resources have to be scarce. Modern mainstream definitions of economics (Rees 1968; Samuelson 1955, p. 5) have simply combined the Robbinsian resource allocation problem with the new economics of employment, inflation and growth developed from Keynes’s work.

Robbins’s definition also aimed to make economics a ‘system of theoretical and positive knowledge’ (Fraser 1937, p. 30), preferring to reserve the older name, ‘political economy’, for applied topics such as monopoly, protection, planning and government fiscal policy, subjects included in his essays on political economy (Robbins 1939). Although Schumpeter (1954) held a similar opinion he was careful to warn that ‘political economy meant different things to different writers, and in some cases it meant what is now known as economic theory or “pure” economics’ (p. 22). These views of political economy conflict with the pragmatic Cambridge outlook on economics, derived from Marshall’s description of economics as ‘an engine for the discovery of concrete truth’, encapsulated by Keynes (1921, p. v) in his famous introduction to the Cambridge Economics Handbooks: ‘Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor to draw correct conclusions.’ This sentiment is concisely summarized by Joan Robinson’s view of economics (1933, p. 1) as ‘a box of tools’.

Marxists had never abandoned the older terminology of political economy. Dobb (1937, p. vii) defended ‘political economy’ against the new term ‘economics’ because its controversies ‘have meaning as answers to certain questions of an essentially practical kind’, associated with the ‘nature and behaviour’ of the capitalist system. Likewise, Baran (1957, p. 131) argued for a ‘political economy of growth’ because an ‘understanding of the factors responsible for the size and the mode of utilization of the social surplus … [is] a problem, not even approached in the realm of pure economics’. For the classical economists, use of the surplus had been a major research question. Political economy is therefore a very appropriate title for the endeavours of some contemporary economists to resurrect both practical and theoretical aspects of the classical tradition in what they describe as the surplus approach.

By the 1960s the radical libertarian right from Chicago and the Center for the Study of Public Choice at Virginia Polytechnic appeared to have appropriated the title ‘political economy’ for their wide application of Robbins’s (1932) injunction that analysis in terms of ‘alternatives’ is the key distinguishing feature of economics. This effectively replaced Robbins’s question ‘what is or is not economic in nature’ with the far wider one of ‘what can economics contribute to our understanding of this or that problem?’ This opens up the way for an economics of ‘family life, child rearing, dying, sex, crime, politics and many other topics’ which some of its practitioners identify with Adam Smith’s research agenda (McKenzie and Tullock 1975, p. 3). Others continue to associate the term ‘with the specific advice given by one or more economists … to governments or to the public at large either on broad policy issues or on particular proposals’ or, alternatively, as another term for ‘normative economics’ (Mishan 1982, p. 13).

At the approach of the 21st century, both terms – ‘political economy’ and ‘economics’ – survive. During their existence, both have experienced changes of meaning. Nevertheless, they can still essentially be regarded as synonyms, a feature of this nomenclature reflecting an interesting characteristic of the science it describes. In its sometimes discontinuous development, economics or political economy has invariably experienced difficulties in discarding earlier views, and traces of old doctrine are intermingled with the latest developments in the science.