The Genesis Of Modern Economics — Political Economy

In the 18th century, the discipline that we now recognise as ‘economics’ was termed ‘political economy’. The most eminent figure of this era was Adam Smith, and his seminal work The Wealth of Nations stands as the foundational text for capitalist economic thought.

Smith’s primary assertion was that markets emerge as a product of countless individual transactions. Each individual acts based on their self-interest, but the collective outcome of all these decisions creates a structured, functioning market system. He introduced the idea of the invisible hand — suggesting that markets, when left to themselves, tend to find an equilibrium without any centralised intervention.

Modern Economics

Developing from the principles of early thinkers like Smith, contemporary economics often studies the market in isolation from broader societal contexts. It treats markets as systems that operate on a set of intrinsic laws, often mathematical in nature.

The Sociological Perspective

In contrast, sociology offers a different lens:

1.Social Institutions: At the heart of the sociological view is the belief that markets are not just mechanical systems but also social institutions. This means they are created, influenced, and maintained by the people who participate in them.