Political economy is centrally focused on the development of the
polity. It pays particular attention to whether the polity is
running a surplus or a deficit, since in the view of most political
economy, any deficit must be met by selling assets, such as gold
or other capital, to other polities - or by some form of borrowing
or externalization.
Political economy, then, studies the mechanism of human activity
in organizing material, and the mechanism of distributing the
surplus or deficit that is the result of that activity. Note
the difference between this paradigm and that of economics which
sees human wants as unlimited, resources as generically scarce,
historical context as not particularly important, and income
distribution issues as less important than efficiency and growth.
While for some there is no difference between the two terms,
for others the difference is one of basic method. Economics
studies trade-offs through measurable values, whereas political
economy focuses on structural relationships. However, there
is no generally accepted distinction between these terms, and
they are most often used on a case by case basis.
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