Letter to the Editor

Robert E. Babe (University of Ottawa)

November 30, 1990

Dear Madame Editor,

Vol. 15:3/4 (September/December 1990) of the Canadian Journal of Communication contains a review by Terence J. Thomas of the book, The Political Economy of Information (Vincent Mosco and Janet Wasko [Eds.]). In his review Mr. Thomas decries the practice of "political scientists, sociologists and those who teach in departments of communication occasionally ... masquerad[ing] as economists." "When this happens," Mr. Thomas asserts, "they call themselves political economists, and they generally make a hash of things." This is because, the reviewer contends, political scientists, sociologists and those who teach in communication departments lack even an elementary knowledge of economics, particularly of key concepts like opportunity cost and efficiency. The reviewer concludes that "If the term 'political economy' is to mean anything useful, it must be related to the economics that is taught in most recognized universities. The Political Economy of Information is an example of false advertising. It will certainly mislead any student curious about the real world."

As one who has attained three degrees from two "recognized universities" in economics, and who has also written extensively in the domain of political economy, I think I have certain insights which should help clarify the distinctions between these two terms, "economics" and "political economy," which your reviewer mistakenly interprets as being synonymous.

"Economics," as taught in "most recognized universities," is the study of flows of goods, services and factors of production, where the central construct is that of Market. Adam Smith in 1776 declared that autonomous buyers and sellers each motivated solely by greed ("self-love") were directed as if by "an invisible hand" to an end, namely maximizing the wealth of nations, "which was no part of [their] intention." Smith termed this Market to be an "obvious and simple system of natural liberty," which arises spontaneously from innate human propensities to "truck, barter and exchange."

Modern economists, fancying themselves as neopositivists, seldom speak of the "invisible hand" but their principal constructs (such as pure competition, utility functions, psychic income, long run cost curves, Pareto optimality, equilibrium prices, contestible markets, and the like) are no less ethereal or imaginary than were Smith's. Provided markets are "workably competitive" or "contestible," neoclassical economists believe, we continue to live essentially in a "simple system of natural liberty" and harmony, wherein each individual narrowly pursuing his or her self interest benefits society as a whole.

Political economists disagree. First they refuse to centre their analysis on markets. Markets are deemed to exist, rather, through the interaction of many factors, one of the most important being law. Law bestows rights and privileges to some, defines property and enforces it, and thereby constitutes the framework within which markets take on shape. Different laws result in radically different markets. This means that legislatures are viewed as arenas of struggle for dominance and control. Rather than, or in addition to, investigating how a particular market is allocating resources, political economists ask why this particular market is operating at this time, and to whose benefit. No simple system of natural liberty here!

Second, political economists believe orthodox economists, in their over-riding concern for "efficiency" are unduly narrow and focus too much on outputs. Billions of advertising dollars are spent each year to convince a compliant public to work forty hours or more a week (if they can secure employment) on routine, tedious, often dehumanizing jobs, so they can afford the "latest model" that will soon be obsolete. Political economists believe that satisfaction should come from our role as productive agent, not merely as consumer, that jobs should be more holistic and the workplace democratized.

Third, along with many others, political economists note that we live on a decaying planet, and conclude that the more greedily and thoroughly each corporation, government and individual pursues his/her/its self-interest, the shorter will be the time period that life will be sustainable. (So much for the invisible hand). Political economists likewise point to the millions upon millions world-wide without homes, malnourished, dying of hunger, and accuse neoclassicists of being blithely unconcerned or unaware of these realities.

In our day it is true that "economics," unlike "political economy," can boast of elaborate, sophisticated, and highly mathematized modes of analysis--"Pontryagin Principles, Rubizinski Theorems, Disequilibrium Models, Natural-Rate Hypotheses"--but this economics is "embarrassingly incapable of dealing with the nagging problems of the real world" (W. Adams & J. Brock, The Bigness Complex, p. 14). Kenneth Boulding once described orthodox economic theory as "the celestial mechanics for a nonexistent universe." For students curious about the "real world," I suggest they turn to political economy.

Sincerely,

Robert E. Babe

Communication, University of Ottawa



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