Study Cards on political, economy, economic

What are the three approaches to political economy?
- State-centric political economy
- Classical/neoclassical political economy
- Marxist political economy
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Where does the classical political economy derive from?
Derived from writings of Adam Smith and David Ricardo.
Based on liberal assumption that individuals , as rationally self-interested creatures (utility maximizers) are the key economic actors (act to achieve the greatest pleasure over pain).
Idea that an unregulated market economy tends towards long-run equilibrium, in that the price mechanism (the invisible hand) brings supply and demand into line with one another.

This implies a policy of laissez-fair. Economic change via the market is therefore a positive-sum game, in that greater efficiency produces economic growth and benefits everyone.
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When did neoclassical political economy develop?
From the late 19th century onwards; more developed they about the behaviour of firms and the optimal use of scarce resources in conditions of perfect competition.
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