Political Economy of the Free Market System and its effect on our work and personal lives.

Topics: Economics, Capitalism, Marxism Pages: 8 (2059 words) Published: April 19, 2015
Political Economy of the Free Market System and its effect on our work and personal lives.

By: Christina Bajwa

“A fusion of economic and political theory into one single social theory” is the definition of political economy provided by the great Yugoslav economist Branko Horvat that Philips uses in his book, Inside Capitalism: An Introduction to Political economy, to explain how it is different from orthodox economics and politics, but rather a combination of both and its social impact on the masses and their every day personal and work life (Philips, 2003, p. 1, 2). Political economy looks at the relationship between individuals and society, as well as markets and the state utilizing a holistic approach obtained from the schools of Economics, Political Science and Sociology. According to political economists, it is impossible to study or understand the economy as a whole without understanding the distribution of economic power of the social and political institutions that form all of its day to day operations. Economics, according to orthodox economists is viewed simply as the relations of the market independent of any political, social or economic power, however political economists such as Philips strongly believe that this is a highly narrow approach that leads to a minimal understanding of the real world and the most important component of our society, ‘the labour market’ (Philips, 2003, p. 2). By focusing all of the attention simply on the analysis and calculation of the market structure, the effects of it on people’s, working class’s, quality of life, income distribution, the environment and the distribution of political power get neglected (Radcliff, 2001, p. 939, 940). This paper will be using a political economic perspective to examine the free market, the role of power and Neoliberalism within it, and how it negatively affects our work and personal lives.

Power is the ability of a person or a group of people to be able to impact and manipulate the economic, political and social state of affairs, behaviour, decisions and principles of other people or a group. The two ways to implement power are either by imposing punishment and rewards or by influencing the knowledge, values or preferences of other people or groups (Larner, 2000, p. 40-43). There are three main sources of power that can be exercised namely: ideology (a body of ideas reflecting the social needs and aspirations of an individual, group, class, or culture.); division of class, gender and race; as well as social institutions such as the legal system, school system, corporations, unions, the media, property rights etc. All the power has been acquired by Neoliberalism which constitutes the dominant ideology since the past few decades and this dominant ideology is unfortunately that which portrays the values and interests of senior executives, high level corporate managers, owners of businesses, important shareholders, and the elite. When this power of the business or ruling class is applied to the free market, it tends to work against the welfare of the working class and favour the business class, or the ruling class (Sobran, 1990, p. 17). For instance, during federal and provincial elections people get showered with fake promises and such as taxes being cut, however what they do not realize are not properly informed of is that these cuts would be compensated at the cost of cutting down on social services that in turn end up disadvantaging the less fortunate who cannot afford those services on their own rather than the affluent who do not require the social services at all. The same Neoliberal political parties also lobby against raising the wages for the working class as they believe that to be the major cause for an increase in inflation and unemployment (Peterson, 2005, p. 12). Their reasoning behind not raising wages while expecting the working class to work longer...

References: Chua, A. (2000). The Paradox of Free Market Democracy: Rethinking Development Policy. Harvard International Law Journal, 41(2), 1-94. http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=5578&context=faculty_scholarship
Larner, W. (2000). Neo-liberalism: Policy, ideology, governmentality. Studies in Political Economy, 63, 5-26. http://spe.library.utoronto.ca/index.php/spe/article/viewFile/6724/3723
Peterson, W. (2005). The Democracy of the Market. The Free Market, 26(11), http://mises.org/library/democracy-market
Philips, P. (2003). Inside Capitalism: An Introduction to Political Economy. Halifax, NS: Fernwood Publishing Co., Ltd.
Radcliff, B. (2001). Politics, Market, and Life Satisfaction: The Political Economy of Human Happiness. American Political Science Review, 95(4), http://bama.ua.edu/~sborrell/psc521/Radcliff.pdf
Sobran, J. (1990). The Trouble With Democracy. The Free Market, 8(5), http://mises.org/library/trouble-democracy
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