Modern Political Economy

Aims of the course

The objective of the course is to systematically present plurality of ideas in modern economics, which is reflected in various orthodox and heterodox economic schools and in their different methodological and conceptual characteristics and policy prescriptions. The course is focused on a critical evaluation of two different methodological traditions, Cartesian and Roman, which have led to the controversies between neoclassical and heterodox approaches in contemporary economics. The emphasis is laid on heterodox, especially institutional theories, which – by taking into account realistic political-economic concepts such as power, interest groups, uncertainty, endogenous technological progress, the impact of inequality, cultural environment, etc. – broaden the domain of economic analysis.

Course syllabus

1. Methodological background of controversies in contemporary economics
1.1 Cartesian vs Roman mode of thought in economics
1.2 Time and equilibrium
1.3 Structural vs dynamic concept of competition
1.4 Economics vs political economy

2. Critique of neoclassical economics as the foundation of economic heterodoxy
2.1 Keynes's critique of full employment (fundamental uncertainty and the principle of effective demand)
2.2 Austrian critique of equilibrium (individualism and free market dynamics)
2.3 Institutionalist critique of perfect competition (institutionalist theory of the firm, business cycle analysis)
2.4 Cambridge capital controversies and theory of distribution

3. Variations of modern economic orthodoxy
3.1 New Keynesian Economics (disequilibria caused by market rigidities and information asymmetries)
3.2 New Classical Economics (rational expectations theory)
3.3 New Institutional Economics (transaction cost optimization, theory of choice)
3.4 Neoclassical growth theories

4. Main strands of development in heterodox economic thought
4.1 Post Keynesian Economics (corporation, investment, growth-distribution nexus)
4.2 New Austrian School (free market, entrepreneur, innovativeness)
4.3 Evolutionary (Old Institutional) Economics (power relations of interest groups, the role of cultural environment, path-dependency)
4.4 Neomarxian economics

5. Heterodox ec. theories and modern political economy
5.1 Methodological pluralism in contemporary political economy
5.2 Corporate hegemony
5.3 Digital capitalism, platform capitalism, network effects
5.4 Measuring well-being, issues of inequality, life-satisfaction research, 'happiness' economics
5.5 Environmental problems, Neo-Malthusian political economy
5.6 Public sector and the role of the state, modern Keynesianism, dilemmas of austerity policies

Course director(s)