The thematic core of this book involves changes in the territorial basis of politics resulting from broader social, political, and economic changes in the domestic and global political economies. We focus in particular on changes in the territorial organization of authority in the modern state. One of the documents we read at the beginning of this project was titled “Beyond Center and Periphery or the Unbundling of Territoriality” (Ansell and DiPalma 1998). In an effort to galvanize our energies into a collective project, this paper enjoined us to examine ways in which contemporary territorial structures of authority could be “unbundled” or “unpacked” so as better to understand changing configurations of power and authority in the modern state.

In part, this guidance was motivated by an emerging literature on the “new medievalism” (Anderson 1996) as well as by persistent critiques that contemporary research in comparative and international politics was state-centric and caught in a “territorial trap” (Agnew 1994). Just as the transition to the Westphalian order involved a consolidation of rule and territory, so the neomedieval turn implies a loosening of the ties among authority, sovereignty, and territory.

The medieval model of rule was marked by three integrated properties of governance. Governance was parcellized and personalized in use and function and aspatial in its underlying conception and physical organization. Parcellization implies no overarching system of rule for all subject matters. Separate authorities existed within the same physical space, without clearly demarcated jurisdictions.

When political economy emerged in the eighteenth century, it did so to help people understand and cope with a dramatic change in the system of want satisfaction, both in the nature of wants and in the manner of production and distribution of goods for satisfying them. The shift from the older term “economy” to the newer term “political economy” marked this change. Economy, taken from the Greek usage, referred to household management. It had relevance to a society in which, to an important degree, wants emerged and the things that satisfied them were produced in the household. Political economy referred to the management of the economic affairs of the state.

The term “political” refers us to two interrelated qualities of the system of want satisfaction. First this system links persons otherwise independent: strangers rather than relatives. To satisfy our wants we now depend on persons not our relatives, whom we might not even know. Second, the boundaries of want satisfaction are now political; responsibility for the system of want satisfaction devolves onto a public authority: the head of state rather than the head of the household. In its earliest period, political economy sought to advise the statesman on how he could best manage the economic affairs of the state so that the wants of the citizens would be met.

The emergence of political economy brought with it a debate over the responsibilities of the state (or statesman) with regard to the economy.

One definition of economics ties it to the market. In so doing, it makes the notions of property rights definitive of economic action. This notion demarcates the economy, distinguishing it from the other spheres of social life, including the political. If we attempt to address the problems of political economy on this basis, we do so by exploring the nature, specification, and limits of property rights.

The concept of justice refers to social ordering principles we can use to define rights (including property rights) and the market system. These principles follow from an idea of personhood, especially of the integrity of persons. Justice-centered theories of political economy judge market institutions against the demands of personhood. But, these demands vary for differing conceptions. In particular, the demands of personhood vary with the concreteness and richness of the idea of the person advanced in the different justice-centered theories. Some theories define personhood at the most abstract level, virtually identifying it with the purely formal condition of legal personality. The person is the legally recognized locus of property ownership and capacity to contract. Other theories define personhood in more concrete terms, identifying the capacities that underlie legal personality with varying degrees of richness. In this chapter, we consider a set of justice-centered approaches. We begin with those insisting on the most formal, and least concretized, notion, and proceed to theories incorporating a more determinate idea of personal integrity.

With Marxism, there are many possible vantage points from which one can discuss political economy. Marxists have seen the political in the very separation of civil society from the public arena (limiting rights and equality to the latter), the class process by which surplus value is “appropriated” under capitalism, the role of the state in managing the interests and affairs of capital, political (that is, state-backed) guarantees of property rights, revolutionary activity to alter the political institutions of capitalism, and the bargaining between labor and capital for control of the economic surplus.

Although these vantage points may supply political content to Marxian economics, the senses in which they do so are not obvious. Even the concept of class, certainly a mainstay of Marxian theory, is not obviously political. Classes can exist even in a society where individuals are disconnected, unaware of common interests, and politically unorganized. Nevertheless, owners of capital may exist and hire those who sell their labor power. Further, production of value and surplus value can occur. In this kind of economy, politics would not be evident in the daily operation of class processes (though the state would have to underwrite private property rights). There would be no struggle for the surplus, no power bargaining between labor and capital, and no state intervention to control labor.

The use of the term “political economy” in Marxian theory does not directly refer us to studies of the relation between economics and politics.

In the approaches to political economy we have considered up to now, the state plays a subsidiary role. In these approaches, political economy is energized by the economy, or more broadly by the system of private interests. Indeed, in these approaches, little exists that cannot be understood on the basis of private (essentially economic) interest. To the extent that these approaches concern themselves with the state, they treat it as an instrument or institution employed by individuals or groups as a way of achieving private ends. Whatever important differences exist among these approaches, one similarity stands out. The state is not essentially an active agent; it serves as an instrument of forces originating among individuals or classes. As Wolin points out, this instrumental conception of the state goes back to Locke and the case against Hobbes.

This form of determination leaves the state in a derivative position. Deprived of its own logic, lacking a motivation and source of energy lying outside economy, the state is reduced to a dependent variable. First, a clear distinction is made between state and economy. Second, economy is accorded a primary place, with the wants and interests of individuals at the center.

Let us start with two broad definitions of economics.

These two definitions, the former stressing material well-being and the latter efficient allocation, recall two of the three approaches to economics discussed earlier in the book. The former definition, offered by Marshall in Principles of Economics, conforms to the idea of economics as material provisioning to satisfy needs and wants. If we broaden Marshall's definition to include nonmaterial means, we have an idea of the economy, or economic processes, that is concerned with wealth, its production, distribution, and consumption. The latter definition has to do with adapting means to ends. Economics here is defined more abstractly, in methodological terms. Economics does not refer to particular kinds of activities but to a distinctive way of adapting resources to ends.

It is this second definition that becomes central to this chapter. Once we abstract economics from economic activities, using the term to characterize situations of choice and scarcity, the door opens to an expanded domain of economics.

Political economy in the classical tradition

In this chapter we explore the classical approach to political economy. The classical economists of the eighteenth and nineteenth centuries were the first to use the term “political economy.” The period covered by classical political economy cannot be stated exactly. A restricted definition would extend from Adam Smith's Wealth of Nations in 1776 to John S. Mill's Principles of Political Economy in 1848. A more encompassing periodization would stretch from the work of the Physiocrats in the middle of the eighteenth century to the death in 1883 of Karl Marx, whom many saw as the last important classical political economist. Marx himself is credited with coining the term “classical political economy” (Dasgupta, 1985:12), dating it from the time of William Petty.

We will divide our consideration of classical political economy into two parts: the argument for market self-regulation and the theory of value and distribution. The first part concerns the nature of the market system and its relation to the state. The second concerns production and use of the economic surplus. The second part draws on more recent contributions within the classical tradition. Although using elements of the classical analytical framework, these recent theories suggest an approach to political economy in some ways at variance with that of the classical economists themselves.

The classical approach frames the central themes of political economy in a distinctive way.

When we began work on this project, we intended to write a book that could be used as a text in political economy courses, at least those with more than a passing concern for theoretical frameworks and the structure of arguments. We planned to produce a text that surveyed those frameworks with a critical spirit. As we wrote the book, our task became more complicated. Even those approaches explicitly using the term “political economy” rarely presented fully explicit theories connecting politics to economics. Often an approach presented us with a picture of only economics or politics. We had to draw out the linkages ourselves. Because of this, the term “survey” may not be as accurate a description of the book we wrote as it was of the book we intended to write.

Our task was complicated in a second way. As our work progressed, something of a shared concern with the direction of work in political economy emerged. Those reading the manuscript strongly encouraged us to make that concern an integrating theme, and we have tried to do so. Still, the book remains largely what it was intended to be: a critical survey and elaboration of approaches.

The term “survey” naturally raises questions about coverage. Because so many disparate activities fall under the heading of political economy, no survey can be both coherent and comprehensive. You have to cut somewhere. Our first cut was to exclude approaches without a substantial theoretical grounding.

The time since the publication of Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations in 1776 to the present day spans over two hundred years. Although there are important elements of continuity from Smith to the present world, neoclassical economics is not just a modern, updated version of classical political economy. The beginnings of the neoclassical system are placed in the 1870s with the rise of marginalist economics. Before the 1870s economics as a system of thought was dominated by the classical agenda: growth, distribution, and the labor theory of value. After the 1870s, this agenda changed in important ways, although it did not change overnight.

To simplify a complex chapter in this history of economic thought, the marginalist revolution succeeded in doing two things. First, it advanced a theory of value grounded in the intensity of subjective feelings (subjective utility theory). And second, it developed the marginal calculus as a powerful conceptual and methodological tool. The upshot of these two developments was that, over the span of the next three to four decades, the emerging neoclassical consensus succeeded in replacing the labor theory of value with one grounded in subjective utility and placed the ideas of “marginal product” and “final demand” at the center while elbowing into the wings the concepts of total product and total demand. With these new ideas gathering momentum as they spread during the last quarter of the nineteenth century, the economy came to be thought of less in terms of material production and reproduction and more as a logic of human action.