What Is The Relationship Of Economics And Political Science?

The biggest link between economics and political science is the way in which a government can choose the type of
economic system a country decides to follow. While political science is concerned with the state, government and
agencies, economics deals with the system which society uses to organize and control the economic sphere. The
three main economic systems a political party can choose between are capitalism, a centrally planned government
or the free market.


Capitalism.
This is an economic system that is based on the accumulation of capital, the means of production of which are
privately owned and operated for profit. These operations usually take place in competitive markets. Within a
capitalist system, income takes at least two forms. These forms are eitherprofit or wages. Profit is received, either
through tools of production or by virtue of control, by those who have provided the capital. In comparison, wages are
received by the workers who have provided a service to the enterprise. They do not have an ownership stake in it and
are compensated whether the enterprise makes a profit or a loss.
Centrally Planned Government.
Within a planned economy, the state directs the economy. The central government has control over the industry and
makes decisions about the production and distribution of goods and services. All major sectors of the economy are
controlled and decisions about the use or resources and the direction of outputs are made by the governing state.
Planners decide what needs to be produced and the lower level enterprises are required to produce these goods and
services in accordance to the national objectives.

Free Market.
Within a free market, the only interventions and regulations that are carried out by the government are tax collection
and the enforcement of private ownership and contracts. The economy markets are unregulated by any parties other
than the market participants. The government plays a neutral role in the administration and legalization of the
economic activity.

Choosing the best economic system for a state is an important decision to be made and is the most important time
that a relationship is established between economics and political science.