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How Economics Influences Political Theory - Leonard P. Liggio, Literature of Liberty, July/September 1979, vol. 2, No. 3 [1979]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


How Economics Influences Political Theory

C.B. Macpherson

  • University of Toronto

“The Economic Penetration of Political Theory: Some Hypotheses.” Journal of the History of Ideas 39 (1978): 101–118.

Why do economic ideas penetrate political theories to varying extents at given historical times? Twentieth-century economics gives little support to political theories because it looks at man as an impersonal demander of utility rather than as does political theory (i.e., as a being involved in relations of dependence and control with other people). Attempts by political scientists to adapt the economic model of marginal utility equilibrium to an analysis of democracy has failed because it ignores the crucial power relations which any political theory must confront.

As a measure of how powerfully economics penetrates a political theory, we can ask whether the economic relations are viewed as settling the problem of the best possible political order. Put rather indirectly: “the economic penetration of political theory varies with the extent of the market.” That is, as markets come to dominate economic life, so economics impinges upon political theories. Because the rise of markets presents unsettling problems for societies, political theorists become concerned with these factors. Locke, Bentham, and James Mill display an increasing belief in the exploitation of the capital/wage-labor relation, and a corresponding belief in the extent to which government's role was thought to be established by economic relations. Strangely enough, J.S. Mill is pictured as marking a decline in awareness of the exploitative nature of capital, and a consequent decline in economic penetration of their political theories. In redefining utility in qualitative terms, Mill moved political theory away from political economy.

In addition, the economic penetration of political theory varies with the political strength of an exploited class; directly in socialist theory, and inversely in liberal theory. In liberal theory this relationship is borne out in twentieth-century political thought. As capitalism becomes less viable, liberals retreat from economic penetration to idealism. This movement should be countermanded by a political theory again becoming informed by economic insights.