lecture 2: introduction to pol. economy

dual meaning of the concept

different meanings

• 2 contemporary definitions of pol. economy

  • economic policy: intervention government in the economy

  • pol. aspects of the economy: interconnection of the pol. and the economical

• both definitions are valid, but stem from historically different theoretical traditions

confusing concept

• 2 concepts in one

• epistemology of the concept pol. economy: comes from ancient greek, knowledge of householding of the state

term pol. economy corresponds with a social reality

• boundaries of economy still largely coincide with boundaries of the state (economy governed by state)

economic evolution

• industrialisation and development of capitalism lead to the dissociation of the pol. and the economical

• leads to 2 different economic theories

  • classical economics: theory in support of the retreat of the state from the economy

  • Marxist (pol.) economy: reaction against consequesnces of that retreat

classical to neo-classical economy

growing division of labour (complex production process divided into simpler tasks

• Adam Smith observes industrialisation

new type of economic organisation

• state should better retreat from economy/markets, because economy/markets self-regulate(s)

• division of labor lays foundation market economy in which specialised production units are spread over larger and larger geographical areas, leading to massive increases in the volume and variety of production and the importance of markets

dissiciation of state and economy

• laissez-faire, laissez-aller

laws of supply and demand

• if supply excesses demand (surplus), producers will reduce production, to meet actual demand

• if supply is below demand (shortage), producers will increase supply, in order to meet demand

marginalist model

• demand is reversely proportional to price

• price - => quantity +; price + => quantity -

• marginal cost: cost of producing one more unit

• marginal utility: value of purchasing one more unit

• market equilibrium: according to neoclassical economy, the supply and demand mechanism provides the most efficient economic outcomes possible. Satisfaction for society maximized, at minimum cost

formal model based on assumptions

• assumption is that if market is left to play, without external intervention (of governments), market equilibrium will arise

• formal model: conditions to make the model work are never met in practice

assumptions of perfect competition

• there are many players and no player mor powerful than the other

• all players are reational and purue their self interest

• markets are transparent, and everyone is fully informed

role of government

• laissez-faire is adapted to relaity of the market

• in practice, governments intervene in the economy in order to

  • correct market failure

  • create market conditions

  • protect against social injusticce

  • act as a participant

transposition to pol. science: rational choice theory

• comparison: producers = politicians; consumers = voters/electorate

• the pol. market will balance out the interest peoples

• people will rationally agree on basis of consensus

• media are neutral players in a free market of ideas

pluralist theory

• recognizes existence of multiple interest groups in society; bounded rationality

• but maintains that consensus can be reashed within the context of reasonable debate

• pluralist media theories: competing interest are (or should be) represented through different media outlets

• state is allowed to correct ‘market failure’, in some instances to provide a public service/anti-trust law

Marxist economics and theory

another historical reality

• SMith’s theories inspired by emergence capitalism and industrialisation, Marx observes consequesnce: emergence proletariat

• for Marx, economic and social inequality is starting point of his analysis

Marx as activist and scientist

• Marx describes history as different stages (tribal society, feudal society, capitalism) in which complexity of division of labour increases and means of production are increasingly privatised

• Marx historical theory not very solid, but had great pol. impact because predicted collapse capitalism and presented communism as superior form social organization

Marx theory in nutshell

• mode of production is defined by

  • division of labour

  • property and control (relations of production)

• property relations are about how ownership si defined, and in particular relate to who controls means of production (land and machinery, to which we would now add information)

labour theory of value

• greater importance for pol. economy (of comm.) is labour theory of value (validity of which is also subject of discussion, but had great moral value)

• question he adresses: what is relation between exchange value of a good or service and its use value?

Marx’s method

• exchange value: value obtained on the market

• use value: that what a prodct is used for (often equated with social value, but this is not exactly how Marx defines it in Das Kapital)

• what is relation between exchange and use value?

labour theory of value

• example: cloth and the clothes made with it → what is value cloth, compared to clothes made from it?

• method used is triangulation, in this context meaning to compare 2 different substances through a common element

• objective measure of relation between use and exchange value is labour time

influence Marxist theory on pol. economy

• economic relations can be looked at as relations between producers and consumers (supply and demand) meeting in a marketplace

• social relations can be looked at economically mediated relations of power between agents in society

different view on economics and social relation and the media

• relations of production = relations of power

• relations of power are articulated in dominance

• these relations of power pervade (= is present in) society

capitalism and media

• communication and control, decide ideology of communication (part of the control) and concentration of power articulated in media and capitalism is monopoly

commodification

• inlfuence of market mechanisms on the media is operated primarily through process of commodification (making things sellable)

• at origin information and content are public goods. these are turned into private goods sold for profit

• process of commodification has major consequesnces, far beyond the economical

• commodification of content: produce contents for which audiences are willing to pay

• commodification of attention: to produce content (ratings) that attract advertisers (to sell ‘attention’)

• commodification of audiences (how commodities create other commodities): ratings, customer data, … become products in their own right

• commodification of labour: users become producers of content (prosumers)

hegemony

• may be assumed that ideological role of media is not effectuated only through purposefully constructed discourses, but implicitly thought addressing audiences primarily as consumers (promotion of individualism, materialism)

• thus, commodified media production contributes to establishing capitalist hegemony, through promotion of materialist and individualist ideology, particularly as embodied in consumerism

• regime controls society through persuasion (not force) effects of dependence of media companies on advertising

  • attract attention of audience through mainstream media

  • advertising promotes consumption => consumerism

conclusion

characteristics of pol. economy of communication

• Marx has been of great inlfuence on (critical) pol. economy of comm.

• following elements commonly found in the critical economy of comm.

  • critical epistemology

  • engagement in society (praxis)

  • historical method

  • holistic view of society

critique

• idea that societoes are determined by their mode of production, nourishes economic reductionism (reduce everything to economy and ignore other societal forces)

• emphasis on (historical) structures nourishes an objectivist view on social evolution that downplays role of social agents