Understanding State, Market, Class, Power and Development in Political Economy

 

1. State

In political economy, the state is understood as a set of institutions that exercises authority, makes binding decisions, and regulates economic and social life. It is not merely a neutral administrator but is shaped by historical, social, and class forces.

• Max Weber defines the state as:

“A human community that successfully claims the monopoly of the legitimate use of physical force within a given territory.”
(Economy and Society)

Weber highlights authority and legitimacy, but political economy extends this view.

• Karl Marx presents a class-based interpretation:

“The executive of the modern state is but a committee for managing the common affairs of the bourgeoisie.”
(The Communist Manifesto)

Here, the state is seen as serving dominant economic classes.

• Theda Skocpol introduces state autonomy:

“States are not merely arenas for social conflict but are organizations with interests and capacities of their own.”
(States and Social Revolutions)

The state:

• Shapes markets through laws and policies

• Reflects power relations among social classes

• Plays a decisive role in development outcomes

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2. Market

The market refers to the system through which goods, services, labor, and capital are exchanged. Political economy rejects the idea that markets are natural or self-regulating.

• Adam Smith emphasized market coordination through self-interest:

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
(The Wealth of Nations)

However, later scholars challenged this view.

• Karl Polanyi argued:

“The idea of a self-regulating market was a stark utopia.”
(The Great Transformation)

Polanyi showed that markets are embedded in social and political institutions.

• Ha-Joon Chang further explains:

“Free markets do not exist; every market is shaped by political choices and power relations.”
(Bad Samaritans)

Markets:

• Are created and regulated by the state

• Reflect power inequalities

• Produce unequal outcomes

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3. Class

Class refers to groups differentiated by their relationship to economic resources, production, and power.

• Karl Marx defines class in relation to ownership:

“The history of all hitherto existing society is the history of class struggles.”
(The Communist Manifesto)

For Marx, class struggle drives political and economic change.

• E. P. Thompson adds a historical and social dimension:

“Class is not a thing; it is a relationship.”
(The Making of the English Working Class)

• Pierre Bourdieu expands class beyond income:

Class is shaped by economic, social, and cultural capital
(Distinction)

Class structures:

• Influence political decision-making

• Shape access to opportunities

• Determine winners and losers in development

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4. Power

Power is central to political economy because it determines who controls resources, sets agendas, and defines “acceptable” policies.

• Max Weber defines power as:

“The probability that one actor can carry out his will despite resistance.”
(Economy and Society)

• Steven Lukes introduces a deeper dimension:

“Power is exercised not only in decision-making but in shaping preferences and perceptions.”
(Power: A Radical View)

• Michel Foucault emphasizes structural power:

“Power is everywhere, not because it comes from one place, but because it is produced in every relationship.”
(Discipline and Punish)

Power operates through:

• Institutions

• Ideology and discourse

• Control over knowledge and policy

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5. Development

In political economy, development is a contested concept involving economic growth, social transformation, and power relations.

• W. W. Rostow viewed development as linear stages:

“Economic growth follows a series of historical stages.”
(The Stages of Economic Growth)

This modernization approach dominated early development thinking.

• Amartya Sen redefined development:

“Development is the expansion of substantive human freedoms.”
(Development as Freedom)

• Andre Gunder Frank, from dependency theory, argued:

“Underdevelopment is not the absence of development, but the result of historical exploitation.”
(Development of Underdevelopment)

Development involves:

• Distribution of resources

• Political choices

• Global and domestic power structures

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Integrative Political Economy Perspective

Political Economy studies how these concepts interact:

• The state structures markets

• Markets allocate resources unequally

• Classes compete for influence

• Power shapes outcomes

• Development reflects these struggles

As Robert Gilpin notes:

“Political economy concerns the interaction of the state and the market in shaping social outcomes.”
(The Political Economy of International Relations)

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