It is generally observed that one of the very important foundations or components of Marxism is British political economy or simply political economy. It is called British because its chief founders or propagators were by birth British. There are few definitions of what is exactly meant by political economy.
An important definition is it indicates the area which studies resource allocation and determination of aggregate economic activity.
Its more specific meaning in a Marxist context relates to the corpus of work of certain writers who dealt with the distribution and accumulation of economic surplus, and the attendant problems of determination of prices, wages, employment and the efficacy or otherwise of political arrangements to promote accumulation.
It is called political economy because the economy or economic affairs and policy making are associated with the art of government.
The government is primarily concerned with the political affairs of the state. But a government cannot consistently ignore the economic aspects and because of this government generally takes active interests in the economic affairs such as the causes of the wealth of nations, price fixation, and distribution of wealth.
Since seventeenth century the term political economy is in circulation, particularly in the academic circles. A good number of scholars believe that for the general welfare of the people a government must see that the economy acts within certain conditions and these conditions must aim at general progress. Summarily, political economy wants to emphasize the general control of state over the functioning of economy.
Political economy has three broad traditions, one is, the tradition of classical political economy.
Another is the Marxian tradition and, finally, the tradition of political economics which uses statistical and modeling techniques to test the hypotheses about the relationship between government and the economy.
Though the term political economy was widely known to academic circles Marx was the first person who gave importance to the concept. In Marxism the term means the corpus of works of several economists and writers some of whom are Adam Smith, David Ricardo, Malthus, James Mill and his son J. S. Mill etc.
Marx focused his attention on the economic writings of Adam Smith (1723-1790) and David Ricardo (1772-1823). Adam Smith’s The Wealth of Nations was a widely read and much discussed book. In it he-said that the political economy is a branch of the science of a statesman or legislator.
An important aspect of political economy is commerce or economic prosperity and growth of political liberty are closely related. Adam Smith strongly argued that progress of commerce or economy as a whole could come if government regulations are relaxed considerably.
If the producers or capitalists are not given sufficient liberty the growth of economy will be adversely affected. Naturally liberty can be regarded as the important factor of the growth of industry and commerce.
This doctrine of Adam Smith is generally called the laissez-faire. Smith’s another message was that individuals shall be allowed to pursue or implement their economic objectives and political interference shall have no voice at all.
The economic policies must be free from political interference but all the policies shall have political purposes. This doctrine of Adam Smith drew the attention of Marx and he thought that Adam Smith’s doctrine paved the way of unhindered growth of capitalism and exploitation of working class.
