Part I Paper 4 Political and Sociological Aspects of Economics

Paper Co-ordinator: Mr N Knight, nvk21@cam.ac.uk

Paper Content
The paper examines aspects of the institutional context of economic life.

Aims
The aim is to provide awareness of the political, social and institutional processes with which economic
activity interacts. The paper offers insights into non-economic conceptions of economic processes,
and also into economic conceptions of institutional processes and the process of development. It will
provide background to current policy debates. It will complement the other papers in Part I by locating
an understanding of economic theory and economic history in the context of political and social
constraints.

Objectives
By the end of this paper, participants should have an understanding of:
major interactions between economic, social, and political processes;
key analytic concepts in economic development;
the history of policy-making in the UK and Europe since 1945;
the institutions regulating employment relations.

Lecture Courses

Governing Britain Since 1945 (N Knight, 14 lectures, weeks 1-7, Michaelmas Term)
An exposition of the political history of Britain in the post-War era; of the governments, the principal
political personalities and economic policy making. It deals with the changing political positions taken
by the major political parties in respect of macro-economic policy, public services, industry, European,
foreign and defence policy.

Labour in the World Economy (WA Brown, 4 lectures, weeks 1-4, Michaelmas Term)
The course provides an introduction to the issues involved in the management of employment, and
to the role played by state regulation. It will discuss the decline in the influence of trade unions and
the increasing impact of legislation, minimum labour standards, and international competition. It will
review alternatives to collective bargaining, such as international intervention and consumer
campaigns, as means of defending labour standards.

European Integration (M Beber, 6 lectures, weeks 1-4, Michaelmas Term)

The course reviews the development of the policy-making competencies and institutions of the
European Union, assesses the performance and limits of the resulting governance framework, and
evaluates different possible scenarios for the future of European integration.

Economics as a Political Subject (H-J Chang, 5 lectures, weeks 1-5, Michaelmas Term)
This series of lectures helps the students understand why the study of politics should be an integral
part of the study of economics. First, it explores how politics and economics interact. Second, it
reviews the diverse and changing role that the state has played in the economy from the 18th century
to the present. Third, it examines various theories of state intervention, including theories of market
failure and of government failure.

Analysis of Economic Development (S Iyer, 8 lectures, weeks 1-8, Lent Term)

An introduction to theoretical and analytical issues in development economics that are relevant
particularly to our understanding of the contemporary economic, social and political problems of poor
countries. It will discuss current policy issues such as how economic growth, population, human
capital, finance, property rights, trade, social capital, religion and income inequality interact.

Topics in Contemporary Political Economy (Lord Wilson and Lord Eatwell, 4 lectures, weeks 5-8, Lent
Term)
The speakers have direct experience of policy formulation and will discuss aspects of contemporary
economic policy making and the political processes underlying them. These lectures are background
for the course and there will be no reading specified.

Recommended Reading

Bates, R. (2001), Prosperity and Violence: the Political Economy of Development.

Butler, E., Public Choice: A Primer
Chang, H-J. (2014), Economics: The Users Guide
Coates, D. and Lawler, P. (eds., 2000), New Labour in Power.
El-Agraa, A. and B. Ardy (2011), The European Union.
Kavanagh, D. and Morris P. (1994), Consensus Politics from Attlee to Major.
Marsh, D. and Rhodes, R.A.W. (1992), Implementing Thatcherite Policies: Audit of an Era.
Meier, G. and Rauch, J. E. (2000), Leading Issues in Economic Development.
Stiglitz, J. et al. (1989), The Economic Role of the State
Todaro, M and Smith, S. C. (2009), Economic Development.
Wallace, H., M.A. Pollack and A. Young (2014), Policy-Making in the European Union.

Supervisions
Supervisions are organised by the Directors of Studies (DoS) in each College. The lecturers for this
paper each provide suggested supervision topics. Their reading lists are circulated to each DoS.

Examination
Students are required to answer 4 out of 8 questions. Past exam papers can be obtained from the
faculty website.

Sample Examination Questions

To what extent did Clement Attlee originate the post-World War 2 British political order?
Thatcherism transformed British politics. Discuss.

New Labour had no choice but to create a new consensus in British politics based upon the free
economy and the strong state. Discuss.

Is the EUs single market a sufficient foundation for monetary union among its members? What other
main features of the Eurozone are seen as key to its sustainability?

The presence of market failure does not justify government intervention. Discuss.
Is less state intervention better for the economy? Discuss with reference to empirical evidence.

The Lewis model of dualistic development explains the process of development using the concept of
surplus labour.

a) Explain the Lewis model of dualistic development and the assumptions upon which it is based.
b) What is surplus labour?
c) Does the empirical evidence from poor countries support the predictions of the Lewis model?

Rapid population growth is clearly inimical to successful economic development. Discuss.